UOB APAC Green REIT ETF Fund Commentary

The UOB APAC Green REIT ETF has recently done some rebalancing. Here's its monthly commentary for the month of March 2022.

UOB Asset Management
UOB Asset Management11 May 2022 3583 Views
UOB APAC Green REIT ETF Fund Commentary

For the month of March 2022


Portfolio Review
The investment objective of the UOB APAC Green REIT ETF (the “Fund”) aims to replicate as closely as possible, before expenses, the performance of the iEdge-UOB APAC Yield Focus Green REIT Index (“Index”).

From its inception on 23 November 2021 to 31 March 2022, the Fund tracked the Index very closely with only very minor performance deviation that resulted from fees and initial deployment.

The Fund Net Asset Value (NAV) vs Index, 23 November 2021 – 31 March 2022


The Index outperformed its non-green REIT indices by 1.74 percent comparing to S&P Asia Pacific REIT Index and by 2.48 percent comparing to iEdge APAC REIT Index year-to-date (YTD).

iEdge-UOB APAC Yield Focus Green REIT Index vs peer indices YTD, 31 December 2021 – 31 March 2022


Market Review

Global equities posted a diverging performance in March. The MSCI All Country World Index (ACWI) rose 2.1 percent (in SGD terms) with the US market the only region posting a positive return. Asia markets underperformed the US market (MSCI AC Asia ex-Japan Index: -2.9 percent in SGD terms) dragged by weakness in China. Markets grappled with the start of the US hiking interest rates, fresh lockdowns in China (Shanghai and Shenzhen) due to a resurgence of COVID-19 infections, as well as a stalemate in peace talks between Russia and Ukraine. Commodity and energy prices surged, while bond yields spiked (10-year US Treasury: +51 basis points (bps) to 2.34 percent) following the US Federal Reserve’s hawkish signaling which led to parts of the US yield curve inverting. The S&P APAC REIT Index gained 3.6 percent as Singapore REITs (SREITs) rallied following relaxed pandemic restrictions. Hong Kong REITs and Japan REITs (JREITs) were key drags.

Japan’s fourth-quarter 2021 gross domestic product (GDP) growth was revised lower to 4.6 percent quarter-on-quarter (q/q) (vs initial estimates of 5.4 percent q/q), leading to a downward revision in GDP for 2021 by 10bps to 1.6 percent year-on-year (y/y). The miss was largely attributable to softer than expected private consumption. The Bank of Japan maintained its dovish monetary stance with a status quo in its benchmark interest rates and asset purchases.

Singapore moved toward domestic and international reopening with a slew of measures. Key highlights include a larger group gathering size of 10 persons (vs five persons previously), a higher maximum limit of 75 percent of the workforce allowed to return to the office, removal of mask-wearing requirement when outdoors, as well as scrapping its Vaccinated Travel Lane (VTL) scheme and allowing fully vaccinated travellers into the country without having to observe quarantine or on-arrival tests.

Australia’s 2022-2023 Federal Budget was conservative relative to the mid-year economic and fiscal outlook (MYEFO) released in December 2021. 2021/22 budget deficit of A$80 billion (3.5 percent of nominal GDP) was substantially smaller than the initial A$134 billion deficit (~6.5 percent of GDP) forecast in MYEFO, largely owing to an upgrade in GDP growth outlook at 10.75 percent y/y (vs 6.5 percent y/y previously) for 2021/22. GDP growth for 2022/23 was revised lower to 0.5 percent y/y (vs 1.25 percent y/y previously). Key highlights of the near-term fiscal stimulus worth A$8.4 billion (~0.75 percent of annual consumption) included a 50 percent cut in fuel excise for six months, higher tax relief for low and middle-income earners, as well an increasing the number of places in the first-home buyers focused ‘Home Guarantee scheme’ to 50,000. The budget also outlined a focus on supply chains with the government committing A$328 million to further support the Modern Manufacturing Strategy and National Manufacturing Priorities.

Hong Kong plans to relax some anti-COVID-19 measures effective 1 April 2022 which include lifting a ban on flights from nine countries, reducing quarantine time for arrivals from abroad to seven days (instead of 14 days currently) as well as reopening schools. Social distancing measures such as lifting the ban on dine-ins (subjected to a maximum of four in a group) will be implemented from 21 April 2022 as long there is no rebound in infections.


Outlook and Positioning

Driven by growing awareness and adoption of net-zero carbon emissions, with commitments to reach net zero emissions by governments and businesses set to double in the Asia Pacific by 2025, 40 percent of the real estate occupiers have already adopted net-zero targets and another 40 percent are planning to adopt them by 2025. Furthermore, an increasing number of real estate investors believe that green certification of buildings drives higher occupancy, higher rents, higher tenant retention and overall higher value to the asset, which further drives the demand of green real estate. We believe green REITs will continue to present an attractive investment proposition by delivering both profit and purpose.

The Fund aims to replicate as closely as possible, before expenses, the performance of the Index. The Index is reviewed semi-annually in March and September. Results from an Index review are implemented on the fourth Monday of the review month. The latest Index review was on 28 March 2022, with the Fund’s rebalancing coming into effect on the same day to track closely the Index.

To deliver profit, the Fund aims to provide 4 percent dividend yield per annum (p.a.) on a quarterly basis. The ex-date of latest dividend distribution was on 1 April 2022. When Index review is conducted, all eligible REITs will be regrouped according to their market capitalization and re-ranked according to their 12-month trailing dividend yield. A basket of 50 REITs with higher dividend yield will be selected to form the holdings.

For the latest review, there were five REITs removed and included.




Dividend trap avoidance is applied when 50 names are selected. Dividend yield traps integration will exclude REITs which have announced very promising dividend pay-out while the stock price performed poorly with regard to one-year annualized total return against the peer group. By adopting dividend yield trap filtering, investor’s profits are further secured. Furthermore, individual and country holdings are recapped to be 7 percent and 40 percent respectively to mitigate concentration risk when the review is conducted.

The following chart shows the latest country break down of the Fund.







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