To The Moon

$GRN.SI(GRN.SI)$ 

Portfolio Review

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 31 August 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 August 2022

Source: UOBAM/Bloomberg, 31 August 2022

The Index outperformed its non-green peer S&P Asia Pacific REIT Index by 3.09 percent year-to-date (YTD).

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

Source: UOBAM/Bloomberg, 31 August 2022

Past performance is not necessarily indicative of future performance. Performance numbers are not annualized.

Market Review

Global equities stumbled (MSCI All Country World Index: -2.89 percent in SGD terms) in August 2022 after the US Federal Reserve’s (Fed’s) hawkishness at the Jackson Hole symposium dashed market expectations of a pivot anytime soon. The 10-year US Treasury (UST) yield climbed to 3.19 percent (month-on-month (m/m): (+54 basis points (bps)) and the US dollar strengthened. Commodities and Brent Crude prices retreated, though silver, copper, and natural gas gained in anticipation of a cold winter amid tight supplies. Asia equity markets outperformed (MSCI All Country Asia Pacific Index: +0.11 percent in SGD terms) the global equities on the back of the reopening of the Association of Southeast Asian Nations (ASEAN), led by Indonesia and Thailand.

Japan’s second quarter 2022 Gross Domestic Product (GDP) of 0.5 percent quarter-on-quarter (q/q) missed market expectations, as the Seasonally Adjusted Annual Rate (SAAR) of 2.2 percent was lower than the consensus of 2.6 percent. The sequential expansion was due to increases in private consumption, business spending, government consumption, and a surprise rebound in public investment. The government will allow non-escorted inbound visitors on package tours from 7 September 2022 onwards.

Singapore’s final second quarter of 2022 GDP was revised lower to 4.4 percent year-on-year (y/y) (vs preliminary estimate of 4.8 percent y/y), after growth in the first quarter was revised to 3.8 percent y/y (from 4 percent previously). The Ministry of Trade and Industry (MTI) downgraded the GDP growth forecast for 2022 to 3-4 percent, from the previous range of 3-5 percent. The MTI cited a deteriorating external outlook and highlighted four external risks: 1) the Russia-Ukraine conflict, 2) monetary policy tightening stance in the advanced economies, 3) geopolitical risks, and 4) COVID-19 risk of potential new variants.

Hong Kong’s final second quarter of 2022 GDP was revised marginally better to -1.3 percent y/y (q/q: +1 percent) from -1.4 percent y/y (q/q: 0.9 percent) in the advance estimate, representing the second straight quarter of contraction after -3.9 percent y/y in the first quarter of 2022. The government plans to ease COVID-19 travel restrictions including aiming to end the current 3-day hotel quarantine for inbound visitors by November 2022, as well as initiatinga “reverse quarantine” program with mainland China.

Australia’s second quarter of 2022 headline inflation rose 1.8 percent q/q and 6.1 percent y/y. This was lower than the consensus estimates of 1.9 percent q/q and 6.3 percent y/y. This marks the second highest reading since the introduction of the Goods and Services Tax (GST). The labour market continues to tighten with the unemployment rate falling to 3.4 percent in July 2022. The Reserve Bank of Australia hiked the cash rate by 50bps to 1.85 percent, in line with market expectations.

Outlook and Positioning

Amid an uncertain global macro environment, the REITs market saw volatility with interest rate expectations changing rapidly in 2022. Despite the negative factors such as rising interest rates and rising bond yields against a backdrop of heightened geopolitical risks and concerns over stagflation, REITs continue to deliver steady rental growth. We believe REITs will continue to generate steady cash flow and be supported by a strong earnings growth outlook.

The performance of the Fund was elevated by the Singapore market while the Japan market was the main drag in August 2022. The following chart shows the latest country allocation of the Fund as date of 31 August 2022.

Country Allocation

Source: UOBAM, 31 August 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 effectively on the fourth Monday of the review month. The latest Index review was on 28 March 2022, when the Fund’s rebalancing came into effect on the same day to track closely the Index. The Fund aims to have income distribution 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 www.uobam.com.sg for more information. The ex-date of the latest dividend distribution was on 29 June 2022.

ESG (Environmental, Social, and Governance) Impact

Green Impact Dashboard

The Green Impact Dashboard (GID) measures the extent that green tilting[4] provides the Fund with a positive sustainability impact. It compares the performance of the Fund against the Non-Green Tilt APAC REIT index. The two indices have the same holdings, but the latter does not include a green tilt. 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 tilting provides the Fund with a positive green impact and our investors can easily monitor the concrete impact.

Source: UOBAM, GRESB, August 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

[3] The expenses include costs, fees or other charges.

[4] 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.

All statistics quoted in the write-up are sourced from Bloomberg as of31 August2022 unless otherwise stated.

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 or publication has not been reviewed by the Monetary Authority of Singapore.

UOB Asset Management Ltd Co. Reg. No. 198600120Z