$UOB APAC Green REIT ETF(GRN.SI)$
The investment objective of the UOB APAC Green REIT[1] ETF[2] (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 30 April 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 – 30 April 2022
Source: UOBAM/Bloomberg, 30 April 2022
The Index outperformed its non-green REIT indices by 1.40 percent comparing to S&P Asia Pacific REITs Index and by 1.72 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 – 30 April 2022
Source: UOBAM/Bloomberg, 30 April 2022
Past performance is not necessarily indicative of future performance. Performance numbers are not annualized
Market Review
Global equities tumbled in April 2022 (MSCI All Country World Index: -6.1 percent in SGD terms) as expectations were built up for a more hawkish US Federal Reserve (Fed) rate hike path. Global inflation remains the key concern and all eyes are on central bankers to make the necessary moves to tame cost pressure. Asian equity markets outperformed the global equities (MSCI All Country Asia Pacific Index: -4.5 percent in SGD terms) as strength in the Association of Southeast Asian Nations (ASEAN) partly offset China’s COVID-19 woes. The US Dollar Index trended higher along with the US Treasury (UST) yields (10-year UST: +60 basis points (bps) to 2.93 percent). The S&P APAC REITs Index outperformed the broader equities market led by Hong Kong REITs and Singapore REITs (SREITs) on the back of relaxed pandemic restrictions. Japan REITs (JREITs) continued to be a key drag, weighed down by depreciation in the Japanese yen.
The Bank of Japan (BOJ) maintained its dovish monetary policy stance with a status quo in its benchmark interest rates and asset purchases. BOJ also pledged to defend its 0.25 percent 10-year Japanese Government Bond (JGB) yield cap for the long-term interest rate strategy of the Yield Curve Control. The gross domestic product(GDP) growth in Fiscal Year (FY) 2021 was downgraded to 2.1 percent year-on-year (y/y) (from +2.8 percent previously) as well as for FY 2022 to 2.9 percent (y/y) (from +3.9 percent previously), while the FY 2023 growth forecast was upgraded to 1.9 percent (from 1.1 percent previously). The inflation forecast in FY 2022 was raised to +1.9 percent (from 1.1 percent previously) due to higher energy costs.
Singapore’s advance first quarter 2022 GDP of 3.4 percent y/y missed market expectation for a 3.8 percent growth. The Monetary Authority of Singapore (MAS) further tightened monetary policy in two ways, by raising the slope of the policy band and re-centering the exchange rate policy band upwards to dampen inflation concerns into the medium term. Core inflation forecast for 2022 was raised to 2.3-3.5 percent y/y (vs 2-3 percent previously), along with higher headline inflation forecast of 4.5-5.5 percent y/y (vs 2.5-3.5 percent previously).
Australian Consumer Price Index (CPI) rose 2.1 percent quarter-on-quarter (q/q) and 5.1 percent y/y for the first quarter 2022 which was above market expectations of 1.7 percent q/q. Revised inflation was +3.7 percent y/y and 1.4 percent q/q which is higher than the Reserve Bank of Australia’s (RBA) target band for the first time since 2010. The RBA raised the cash rate by 25bps to 0.35 percent, above the 15bps expected by consensus and the first hike since late 2010. The earlier-than-expected move by the RBA implies a more aggressive tightening path than market expectation.
Hong Kong eased some of its border restrictions effective May 2022 which included lifting a ban on entry into the city by non-residents, shortened mandatory hotel quarantine for passenger flight crew as well as loosening some of the amounts of time flight routes are banned for carriers found to have flown positive COVID-19 cases. The decline in retail sales moderated further in March 2022 (-13.8 percent y/y) following a 14.6 percent contraction in February 2022. This brings the first quarter of 2022 retail sales to -7.6 percent y/y.
Outlook and Positioning
The REITs sector was not spared from the correction in global markets YTD as markets reprice the front-loading of central bank interest rate rises and rising bond yields, against a backdrop of heightened geopolitical risks and concerns over stagflation. Despite the macro-level headwinds, property-level fundamentals remain supportive. Sector valuations post the rebasing remain relatively attractive and conditions supporting a strong REITs sector earnings growth outlook are largely intact.
The performance of the Fund was elevated by Hong Kong market while Japan market was the main drag in April 2022.
The following chart shows the latest country allocation of the Fund as date of 30 April.
Country Allocation
Source: UOBAM, 30 April 2022
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 effective on the fourth Monday of the review month. The latest Index review was on 28 March 2022, with the Fund’s rebalancing coming into effective on the same day to track closely the Index. The Fund aims to provide 4 percent dividend yield per annum (p.a.) on a quarterly basis. Distributions in SGD are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus. Please refer to ww.uobam.com.sg for more information. The ex-date of latest dividend distribution was on 1 April 2022.
ESG (Environmental, Social, and Governance) Impact
Green Impact Dashboard[3]
The Green Impact Dashboard (GID) measures the extent that green tilting provides the Green REIT ETF/Index with a positive sustainability impact. It compares the performance of the Green REIT ETF/Index against the APAC REIT index. The two indices have the same holdings, but the latter does not include a green tilt3. We measure the Fund’s green impact from 4 metrics:
greenhouse gas emission, energy consumption, water consumption and Green building certification.
This dashboard indicates that green tiltingprovide the Fund with a positive green impact and our investors can easily monitor the concrete impact
Source: UOBAM, GRESB, April 2022
*DCR: Valid green building certification obtained at the time of design, construction, and/or renovation
**OPS: Valid operational green building certification
[1] Real Estate Investment Trust
[2] Exchange Traded Fund
All statistics quoted in the write-up are sourced from Bloomberg as at 30 April2022 unless otherwise stated.
[3]Green tilting refers to the weights of selected REITs within the ETF/Index. The weights of selected REITs can either increase, reduce or remain unchanged at each index review date based on the GRESB Environmental Performance and Development Components (“Environmental Score”) in addition to the overall GRESB Score as assessed by the independent research firm, GRESB, to reward greener REITs and penalize less greener REITs.
Important Notice and Disclaimers
This document is for general information only. It does not constitute an offer or solicitation to deal in units (“Units”) in the UOB APAC Green REIT ETF (the ”Fund”) or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it.
The information contained in this document, including any data, projections and underlying assumptions, are based upon certain assumptions, management forecasts and analysis of information available and reflects prevailing conditions and the views of UOB Asset Management Ltd (“UOBAM”) as of the date of this document, all of which are subject to change at any time without notice. In preparing this document, UOBAM has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by UOBAM. While the information provided herein is believed to be reliable, UOBAM makes no representation or warranty whether express or implied, and accepts no responsibility or liability for its completeness or accuracy. Nothing in this document shall, under any circumstances constitute a continuing representation or give rise to any implication that there has not been or there will not be any change affecting the Fund. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or UOBAM and any past performance or prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of Units and the income from them, if any, may fall as well as rise, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate or affiliate (“UOB Group”) or distributors of the Fund. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund's prospectus. The UOB Group may have interests in the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund.
Investors should note that the Fund is not like a conventional unit trust in that an investor cannot redeem his Units directly with UOBAM and can only do so through the participating dealers, either directly or through a stockbroker if his redemption amount satisfies a prescribed minimum that will be comparatively larger than that required for redemptions of units in a conventional unit trust. The list of participating dealers can be found at www.uobam.com.sg. An investor may therefore only be able to realise the value of his Units by selling the Units on the Singapore Exchange Limited (“SGX”). Investors should also note that any listing and quotation of Units on the SGX does not guarantee a liquid market for the Units.
An investment in unit trusts is subject to investment risks and foreign exchange risks, including the possible loss of the principal amount invested. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before deciding whether to subscribe for or purchase any Units. You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you.
The Fund is not in any way sponsored, endorsed, sold or promoted by and/or its affiliates and SGX and/or its affiliates make no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the iEdge-UOB APAC Yield Focus Green REIT Index (the “Index”) and/or the figure at which the Index stands at any particular time on any particular day or otherwise, The Index is administered, calculated and published by SGX. SGX shall not be liable (whether in negligence or otherwise) to any person for any error in the Fund and the Index and shall not be under any obligation to advise any person of any error therein.
“SGX” is a trade mark of SGX and is used by the Index under license. All intellectual property rights in the Index vest in SGX.
The use of UOB's name, logo or trademark on this document in relation to the Fund is not representative of the views of UOB. UOB is not the offeror or manager of the Fund and does not perform any investment nor advisory role to UOBAM as a consequence of the use of the word “UOB” in the Fund’s name. UOB is not responsible for the performance of the Fund nor is UOB involved in the manner with which UOBAM manages the Fund. No recommendation or advice is given by UOB of any kind and this document was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. UOB assumes no direct or consequential liability for any errors in or reliance upon this document.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
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