Digital wealth manager Syfe has replaced Starhill Global REIT P40U with OUE LJ3 REIT in its Syfe REIT+ portfolio as part of a semi-annual rebalancing. The adjustment was completed on March 28.
The Syfe REIT+ portfolio tracks the iEdge S-REIT Leaders Index, which is also rebalanced twice a year.
In an email to users on April 2, Syfe says OUE REIT was added to the iEdge S-REIT Leaders Index “due to its improved liquidity”, and the Syfe REIT+ portfolio had followed suit.
Meanwhile, Syfe dropped Starhill Global REIT from its 20-strong portfolio as the Singapore-listed REIT possesses the lowest new weighting in the iEdge S-REIT Leaders Index.
As of March 8, CapitaLand Integrated Commercial Trust C38U (CICT) remains the largest constituent in the Syfe REIT+ portfolio, at 10.01%; while CapitaLand Ascendas REIT A17U (CLAR) remains in second place with a 9.99% weightage.
Frasers Logistics & Commercial Trust moved up three spots to place third as at March 8, with a 9.91% weightage; while Mapletree Logistics Trust M44U and Mapletree Industrial Trust ME8U fell to fourth and seventh place respectively.
See also: From 2021: Syfe drops SPH REIT from REIT+ portfolio, adds Lendlease and AIMS APAC
Challenging start to 2024
Singapore REITs (S-REITs) had a challenging start in 2024, says Syfe, “primarily due to the upward pressure on interest rates in 1Q2024”.
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
“The strong US economy and delayed anticipations for rate reductions until 2H2024 pushed US Treasury yields higher. Nevertheless, the March Fed meeting indicated the central bank's plan for three rate cuts by the end of 2024, signalling a pivot in monetary policy.”
Historically, the S-REITs sector tends to perform well after the end of a monetary tightening cycle, says Syfe. “With the Fed shifting to a more accommodative stance, S-REITs are well-positioned for recovery.”
S-REITs continue to provide attractive yields, says Syfe. The firm expects the 100% REIT Syfe REIT+ portfolio to offer a dividend yield of around 6.4% per annum.
Launched in partnership with the Singapore Exchange S68 in 2020, Syfe REIT+ is an “optimised portfolio of the 20 most well-known Singapore REITs”. Since April 2020, Syfe users have been able to choose either a portfolio made up of purely S-REITs, or a risk-managed portfolio that balances S-REITs with government bonds.
Instead of fully replicating the iEdge S-REIT Leaders index, Syfe says it uses an optimisation process to construct an index-tracking portfolio.
Its selection focuses on S-REITs that are Singdollar-denominated, liquid and backed by a decent market capitalisation and reputable management teams, says Syfe.
The optimisation process, especially the exclusion of US dollar-denominated REITs such as Manulife US REIT, has contributed to the outperformance of Syfe REIT+ portfolios, says Syfe.
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Syfe REIT+ (100% REITs) outperformed the index by 1.7% in 2022 and 1.6% in 2023, before accounting for management fees.
As at 12.43pm, units in Starhill Global REIT are trading flat at 49 cents.
Table: Syfe
