REITs Singapore Market

Quick Thoughts On Syfe REIT+ Rebalancing (Mar 2023)

Calvin Lo

Syfe just updated via email that they will be rebalancing REIT+ portfolio in line with the semi-annual review of iEdge S-REIT Leaders Index for March 2023. Rebalancing will be completed by this Friday 24th March 2023 evening.

Below is the updated REIT+ constituent list:

Notable changes

  • Increase in weights of industrial REITs, i.e. Frasers Logistics & Industrial Trust, Mapletree Industrial Trust (except Mapletree Logistics Trust which has hit the cap of 10%).
  • The only other notable increase in weight was for Parkway Life REIT.
  • Reduction in weights of Keppel DC REIT, Capitaland China Trust, CDL Hospitality Trust, and Paragon REIT.
  • No changes to constituents.

As for the risk-managed REIT+ portfolio, weightage of bonds in ABF Singapore Bond Index Fund will be maintained at 36.77%. The rest of the weight changes are similar to REIT+ without risk management.

Rebalancing methodology

Digging a little bit into the methodology to help understand the how the rebalancing of the iEdge S-REIT Leaders Index is done, here are the steps:

  • Constituents are first weighted by free-float market cap
  • Then, a liquidity enhancement is performed where constituents are assigned an adjustment/modifier according to its liquidity
  • Thereafter, constituents weights are capped at 10%
Source: SGX

My thoughts

There seems to be minimal changes in constituent weights this round of rebalancing. The addition to Industrial REITs seem to be a reversal from the last rebalancing exercise in Sep 2022.

See also my thoughts on the Sep 2022 rebalancing exercise here.

Keppel DC REIT has fallen out of favour in view of the slowdown in the tech sector (slowing revenue growth and tech layoffs). Troubles have also started to arise with another data centre REIT, Digital Core REIT which may be a factor affecting Keppel DC REIT too. So the reduction in exposure to data centres is welcomed as it reduces the risk of the index.

I’m less certain about the reduction in exposure to China, hospitality and retail, which I think may benefit from the China reopening. So, that’s something I’ll keep an eye on.

So far, the iEdge S-REIT Leaders Index has somewhat stabilised after the huge decline back in late 2022 triggered by aggressive rate hikes. Going forward, I think REITs may benefit if the Fed slowing rate hikes (more certainty on cost of debt) in response to the banking crisis and if inflation continues to stay elevated (rental rates continue to rise).

Source: SGX

Read also my Syfe REIT+ review.

I’ll be looking to add to Syfe REIT+ or CSOP iEdge S-REIT Leaders Index ETF (SGX:SRT/SRU) which tracks the same index, since I’m currently slightly underweight REITs.

If you’re interested to sign up for a Syfe Wealth or Syfe Trade account, you can use my referral code SRPT47KQL or link here to enjoy up to 6 months of fees waived (Syfe Wealth) or $70 cash credit (Syfe Trade).

Follow me on Facebook, Telegram, Twitter and Youtube.

Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

Download my FREE Ebook: How to Start Investing in Stocks for Beginners

For more investing tips, visit my Guide page.

For more investing resources, see my Referrals page.

Disclosure: This post may contain affiliate links and I may get a commission when you click on the links or open an account through the links, at no additional cost to you. I only recommend products or services that I have personally tried and have found useful.

One thought on “Quick Thoughts On Syfe REIT+ Rebalancing (Mar 2023)”

  1. Pingback: REIT Posts of the Week @ 25 March 2023

Comments are closed.