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Friday, 14 October 2016

Who will like this SGX APAC Dividend Leaders REIT ETF?



Japan yield hunters

Top of my mind, I think Mr and Mrs Watanabe will like this ETF!

I mean Mrs Watanabe is famous for being conversant with forex trading as a side income. So foreign exchange risk is not an issue since they are not "bei kambings" (white little lambs).

With negative interest rates back home, Japanese insurers and pension funds have been piling into Australian bonds as they continue their search for yield.

Currently, the Australia 10 year bond yield is around 2.25%.

Those Japanese investors who are more "garang" (aggressive) may want to spread some love into this REIT ETF as they can get double the yield at 4.5%.

Nothing ventured; nothing gained!



Emerging Markets Hedgies

The next group of investors who may be interested could be our neighbouring investors from Thailand, Malaysia, Indonesia; etc.

I mean those investors with home currencies that fall super fast whenever there's a risk off environment.

No need to look far. Just look how their currencies tanked during beginning of this year, taper tantrum 2013, and fiscal cliff end 2011, 2008/09 Great Financial Crisis, and of course the mother of all currency crashes - the 1997 Asian Financial Crisis!

Notice this ETF is also listed in USD? Make a wild guess why is this so?

Normally you have to "pay" to put hedges on; but this REIT ETF vehicle pays you a dividend instead!

Good, better, best or what? 



Singaporeans not the main target group lah

First, competent retail investors won't bite. Not when we are already spoilt for choice with SGX listed REITs that yield more than 4.5%. Duh!

Secondly, those Panda and Koala bear Singapore stocks only "specialists" would lose their home-base advantage or edge.

I mean with 59% weighting in Australian REITs, unless you tell me you read the Australian press or economic news daily, tell me how you'll have an edge over that Australian investor who takes the opposite side of your position?

Who from Singapore will bite then?

Probably those Singaporean retail investors who salivate whenever they hear the word REITs. And when they hear ETF, they immediately associate it with "low cost".

Put both words REIT and ETF together, its "Buy!", "Buy!", "Buy!".

They can't help themselves. It's a Pavlovian response.



How to verify me

Come next week, when this SGX APAC Dividend Leaders REIT will start trading, look at the trading volume for both the USD and SGD tranches.

You can throw eggs at me if the SGD side has bigger trading volumes!





P.S  This post is labelled as "Advertorial" since the kind folks at Phillip Capital Management treated some of us bloggers to free dinner last night.

Just give me a drink and I'll sing like a canary for you!



41 comments:

  1. Oh!

    3 common questions competent retail investors often enquire:


    1) Is this Reit ETF synthetic? No, this ETF uses physical replication.

    2) Does this ETF hedge its currency risks - No.

    3) What happens when there's a rights issue? The ETF manager will subscribe to these rights "if" its in the best interest of shareholders. (Read it in whatever way you may like)

    ReplyDelete
    Replies
    1. Where does ETF manager find the cash to subscribe for those right issues or they do asset re-allocation to raise cash for subscription whenever it is in the best interests of shareholders?

      Borrow or money falls from the sky?

      Since ETF mgr confirms Quote... ETF do not have Right Issue as they are always used as investment tool to track the performance of an Index which in this, the performance of 30 highest total dividend paying REITs in the Asia Pacific Ex Japan region.

      Hence, the concept of dilution is not applicable in this instant.

      End quote.

      Delete
    2. concept of dilution is not applicable in this instant.

      if ETF mgr doesn't subscribe for all the right issues. The above concept of NA is really bullshit!

      Delete
    3. CW,

      :)

      That why I reminded readers to read it in whatever way you may like!

      LOL!

      Delete
  2. Hi SMOL,
    Yah ! Good point ,,, " what holding tax ? , currency risk ? Market or commercial sector concentration? "" forget about it ,,, is all for different group of investors lah !!! Of course not you and me ,,, hahaha !
    Cheers !

    ReplyDelete
    Replies
    1. STE,

      I was whispering to another blogger this REIT ETF could be the indicator to an intermediate top in REITs.

      You and I have experienced it.

      During the tech boom prior to 2000, everyone launching and selling technology funds.

      Then comes the commodity boom of 2011 - everyone excited about Olam, Noble, Wilmar. Commodity funds anyone?

      Lucky during the O&G boom no one introduced an O&G ETF - if not, more people will get trapped.

      Shhh....

      Delete
    2. Many may forgotten during oil boom. We have Oilpods. To know more. Just google Oilpods. :-)

      Delete
    3. CW,

      Good that CPF got some restrictions on what vehicles we can use for investments.

      Imagine if CPF members have a free rein and had invested in Land Banking (I look that false shepherd no up), Oilpods, Ostrich farms, Gold Trading and what not!?

      Its my money and I can do whatever I want with it!

      Right...


      Why someone so eager to help you get rich?

      Commissions and fees.


      Why someone so eager to help you insure against illnesses and death?

      Commissions and fees.


      Why someone so eager to help you be financially literate?

      Fees and more fees.


      Why you and I willing to chit-chat with strangers?

      Kopi?

      Hmm... I think we need to take up a course on how to be more mercenary... Be more wolf like.

      LOL!

      Delete
    4. Okay. No more kopi o kosong. Upgraded Iced Coffee. :-)

      Delete
  3. Hi Smol

    No wonder they call you the wolf of buffalo street. Hehehe kidding :x

    ReplyDelete
    Replies
    1. Small Time Investor,

      I meeeeeh...

      A cute little lamb.

      OK, a cute old sheep :(

      Baaaaah.

      Delete
    2. Ok serious

      If the Asx doesn't do good, it's good as screw. And not forgetting our local STI.
      There's an free seminar for this reit etf on next Tuesday 18 at sgx centre.

      Go there see see look look.
      https://www.sgxacademy.com/index.php?option=com_sgx&task=eDetail&id=1942&Itemid=8

      Delete
    3. Small Time Investor,

      Australia for the past 25 years did not have a recession - not even 2008/09!

      But then, they had China with its 2008 stimulus which helped sustain the commodity bull run from 2009 to 2011.

      Whether Australia can escape the next global recession?

      Well, we may have to look to China...


      LOL!


      Imagine asking the innocent "bei kambing" interested in this ETF what's his macro views on:

      1) China;

      2) the commodity sector;

      3) interest rates differential between US and Australia bond markets;

      4) and finally translating this to his final unifying view on AUD going forward.


      Huh!?

      Delete
  4. Panda and koala hahahaha. The humor brings me back, always.

    Hmm I'm not sure whether the kind folks were expecting this blog post in return. And you nvr say mention tax. Intentional? :D

    ReplyDelete
    Replies
    1. Kevin,

      It's intentional.

      Only Singaporean retail investors are spoilt with this withholding tax thing. Foreign investors? Meh.

      (1,2,3. Thank you big daddy!)


      The currency movements may have a much bigger impact on the distributions ;)

      From the high of AUD 1.10 against USD in 2011 to today's 0.76 there about. Now that's a 30% depreciation...

      It's a great proxy if you are bullish on AUD going forward though!

      But for the last few Reserve Bank of Australia meetings, the RBA is trying hard to jawbone the AUD down - saying the "strong AUD" is a headwind to the economy???

      AUD 0.76 against USD is still too strong?

      Buy if you think the AUD has already hit the bottom :)

      Delete
  5. Haha, next time then don't ask you out for dinner liao :)

    ReplyDelete
    Replies
    1. LP,

      Au contraire!

      I am helping them to promote this ETF to my 1 regular reader in Japan, to a dash of Malaysian readers, and a sprinkle of readers in Indonesia :)

      I've no regular readers from Thailand though :(


      What?

      Singapore is a teeny weeny little pond.

      My "lelong" is towards Asia Pacific wide you know? The true target group for the ETF manager ;)


      Don't you spoil my "lobang"!

      Shhh....


      Delete
    2. Yah ! Looking for " globalization " not only within red dot ,,, anyway " 吃照吃。话照说。" hahha. :)
      Cheers. 👍👍

      Delete
    3. STE,

      Well, those who are vested in SGX would appreciate me ;)

      We badly need more foreign investors to come pump up our dismal SGX daily trading volumes...

      Especially our SGX listed ETFs. The liquidity is eye tearing sad :(


      Delete
  6. Ha! Ha!
    Ya! No dinner for you anymore from you know who.
    So far your version is one of the best why it's not attractive.

    You see that's what i mean no education never mind.
    There are many people like you who can open our eyes and ears.
    WE ONLY NEED TO USE OUR COMMONSENSE TO WEIGH THE CONTENTS OF WHAT WE SEE AND READ.
    NO NEED TOO MUCH EDUCATION.

    ReplyDelete
    Replies
    1. temperament,

      A big part of my post is promoting this ETF and showing how attractive it is - to non-Singaporean retail investors :)

      Like CW has said, "One door closes; one window may open."


      At least I got one compliment from you for my "creative" financial PR :)

      Kamsiah!

      Delete
    2. Ha! Ha!
      Did i compliment you?
      Where?

      So you think you will got many more dinners from some other people, i see!

      Delete
    3. temperament,

      Don't be shy! Say it! Say you like me ;)


      I saw you having fun in Valuebuddies too!

      We same same lah!

      We play the role of the 2 little dots in the Tao symbol ;)


      Some financial business sites and bloggers have the same reputation as food bloggers...

      Me?

      I'll protect at all costs my image as THE man-whore for I'm as shallow as piss on the sidewalk :)


      Delete
  7. Jared,

    Got a question to ask, if your boss is a sinking ship do you not have an exit plan? What will you do?

    ReplyDelete
    Replies
    1. Captain of sinking ship have an Exit Plan - i.e. throw some of crew members over board to save the ship. Do crew members have exit plan? May be yes for some visitors to this blog. :-)

      Delete
    2. Blursotong King,

      In my wonderful and fulfilling 14 years at my previous full time job, I had 7 bosses in total.

      5 of them loved my heretical and unconventional way of challenging "group think". They are the ones who helped me grow and fly!

      The other 2 bosses hated me as a renegade in their dept. These are the 10 year series, SOP, past precedents kind of pedantic bosses. Follow the well trodden path; don't stray! I can't breathe in such environments.


      Towards these 2 bosses, I did the below 2 things:

      1) I pray every day these 2 bosses will get a promotion and transfer out of my dept! Its a karma thing. I never wish ill will towards them right? LOL!

      2) At the same time, I approached HR and put in an official transfer request. Anywhere!


      Without false modesty, let's say I have a little reputation within my organisation.

      It was not difficult to get interesting offers from bosses in other divisions who liked the way I work.

      They knew me from the cross organisational projects I loved to volunteer. That's how I sell and promote myself!


      One of the two bosses who disliked me even tried to delay my transfer (promotion) to my new division.

      Silly pettiness. We hated each other, yet tried to "wayang" to HR and cry baby that I'm very important to his dept and he can't afford to lose me... What an ass!


      We ALWAYS have a choice.

      If we say we no choice, then accept yourself as a slave. Just do what our master tells us to do.

      Slaves have no choice.


      No, I'm a free man.

      Delete
  8. ok, i'll increase my shorts!

    ReplyDelete
    Replies
    1. coconut,

      You may want to check with your brother first.

      What I've heard is that institutional interest and demand from our neighbouring countries are quite "strong".

      Their home exchanges not a lot of REITs choices mah!


      You may want to stand aside for the first few hours of trading and let these institutional buyers fill their buy orders first ;)

      Delete
  9. Hi SMOL,

    My concern is that the REITs underlying the ETF has already ran up a lot.......On the other hand, I'm waiting for VNQ's price to drop ;)

    ReplyDelete
    Replies
    1. Unintelligent Nerd,

      So refreshing to finally able to exchange pointers with someone who is not a Panda Singapore stocks only extreme specialist!

      For the benefit of other readers, this Vanguard REIT Index Fund ETF (VNQ) is definitely not "cheap".

      Well, if one is a "Growth" investor - buy high; sell higher" - buying at today's prices is not a problem just as long you are confident to be able to offload at higher prices to "bei kambings".

      If one is a "Value" investor, then patiently waiting for a May 2013 Taper Tantrum like event may present a better entry point ;)


      REITs are based on property assets. Properties are cyclical plays. Knowing when to enter and exit is critical.

      Just ask any profitable property investor ;)

      Delete
  10. Hi Jared, I do see your point. It might not be the best of choices there are for the seasoned investor.

    I would like to add one more group (a large one that is) that would benefit from investing in this REIT ETF:

    The non-investor keeping his savings in a not-even-inflation-beating Fixed Deposit suffering from the Paradox of Choice. He is so far paralyzed by too many options in REITs and as a result does nothing.

    Now this basket of fundamentally solid (presumably) REITs would address this bias. Of course only as long as that non-investor manages to overcome his ingrained status quo bias first.

    In addition that REIT ETF does help nicely to overcome the Home Bias so many fellows appear to be suffering from.

    ReplyDelete
    Replies
    1. Andy,

      To the non-investors who are clueless, there are already the prime targets for wolves and foxes.

      They either use Fear - if don't invest inflation will eat up all your money! Do it now!

      Or use Greed - you can become fabulously rich easy! See that millionaire clown over there? If he can do it, so can you! If you think you can, you can!


      Sometimes good intentions can do more harm than good - just look at the majority of CPF members under CPFIS...


      No, I wouldn't want to encourage anyone to try their "luck" with investing. It's better they start their own journeys through their own volition.

      That catalyst for action should come from WITHIN; not from outside...


      The sad reality is - the majority of unskilled retail "investors" will lose money to the minority competent (or lucky) ones.

      Just ask any remisiers or dealers in the brokerage industry. How many of their clients can make money LONG TERM?


      Delete
    2. Jared,

      Yes, there are too many clueless or 'I-don't-bother' non-investors out there. But those would hardly flock to your watering hole, would they?

      I am just saying that for those who have been willing to learn but are still spoiled for choice this bundled REIT ETF might be an option to overcome some of their cognitive biases that make successful investing a bit challenging.

      Delete
    3. Andy,

      You'll be surprised! I would politely refer them to the bleeding heart or the fisherman's blogs.


      Fair enough. Baby steps to expand beyond SGX ;)


      There's this one bias that's more insidious - the IPO or new property listing bias.

      Somehow, newbies like to equate "new" as good, better, best?

      Veteran investors know that's not the place to look for "bargains"...

      Is there a proper name for this kind of "new" must be good kind of bias?

      Delete
  11. Good question. Not so sure.

    Maybe you could call it "Illusory Fallacy" where we see a correlation between "New" and "Good" even if there is no such relationship at all.

    Or you could call it "Anecdotal Fallacy" where you recall one such case where "New" was actually "Good" but forget about all the other cases where this was not the case.

    Or you could call that also "group attribution error" where one believes that the characteristics of an individual group member are reflective of the group as a whole (= "New").

    Or you could simply call it "Stereotyping".

    You see, I am not an expert. I can't pin it down and of course I am totally biased.

    ReplyDelete
    Replies
    1. Andy,

      Thank you. Its so interesting to study human behaviours - our own and of others!

      Delete
  12. consider a newspaper, Imagine that there are no news in this world for 1 week, how? Possible?

    That is impossible according to historical facts. The world of today always create "New or News"?

    So this ETF is just another "New or News" that need to be created and will be constantly be created.

    So u have to decide what works best for u and not when some sales person with personal agenda telling u what work best for u when it only work better for him.

    So this ETF is just another new and more extensive product so that Finance people can offer to those who know little about JAPAN, SG or AU Reits and yet was lead to it bcos they want to be a part of it!

    ReplyDelete
    Replies
    1. Rolf,

      People like "new" things. New fads. Flavour of the month that sort of thing.

      Yup, a few months from now, no one will be talking about this ETF as a sexier and prettier ETF may emerge.

      Perhaps its just me.

      And I thought property as an asset class is kind of "bubbly" in most developed countries at the moment?

      What?

      Hot money flowing out from China has to go somewhere?

      Oh!

      How wonderful when you own property assets and wishes to cash out!


      Delete
  13. the world has a macro problem now. So anything that bundle up imo now is in general not that good except for few exceptions.

    banks n properties n all the tech startups that run on future reputation n debts w/o profits need to be v careful!

    if we really need to invest, we need to find instruments that is more detach in its relationships with the macro problem. companies with net cash, consistent cashflow n a reasonable 3-4% yield is sufficient!

    Dun be greedy!

    Just my opinion!

    ReplyDelete

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