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Syfe REIT+ vs VNQ – Which REIT Fund Is The Better Investment?

Calvin Lo

If you want to gain exposure to real estate assets through REIT funds, which one(s) would you invest in? In this post, I’m comparing between robo-advisor Syfe’s REIT+ portfolio (technically not a fund) and the Vanguard Real Estate ETF (VNQ). I’ll be comparing between the following criteria:

  • Performance
  • Dividend
  • Holdings
  • Fees
  • Others

TL;DR

Syfe REIT+ has slightly better long term returns and higher dividend yield, but VNQ has exposure to a larger real estate market (US) and has lower fees. Which one you choose might come down to other factors like market access, familiarity, or platform.

See also my review of Syfe REIT+ here.

Performance

Comparing total return performance, Syfe REIT+ seems to have a slight edge over VNQ in the longer term, although VNQ seems to be holding up much better in recent times.

As of 31 May 20221Y3Y5Y10Y
Syfe REIT+-0.54%3.80%7.13%9.08%
VNQ1.99%8.09%7.81%8.90%

Performance data updated as of 31 May 2022. Total returns include changes in share prices and reinvestments of dividends and capital gains. Screenshots from respective websites below for reference.

Dividend

One of the main reasons for investing in REITs is for the dividends (or distributions, the technically correct term for REITs).

Syfe REIT+ dividend yield in 2021 was 4.8%, higher than the 2.96% for VNQ.

For US foreign investors (e.g. Singapore), we are subject to 30% withholding tax which bumps VNQ dividend yield further to 2.07% only.

Source: Syfe
Source: VettaFi

Holdings

The most significant difference are the holdings. Syfe REIT+ holds solely Singapore REITs, whereas VNQ holds solely US REITs. Since the US market is much bigger than Singapore, investors in VNQ are exposed to a larger proportion of the global REIT market.

Syfe REIT+ tracks the iEdge S-REIT Leaders Index, with largest exposures to Industrial REITs (39.0%), Retail REITs (27.0%), and Diversified REITs (13.4%). The largest individual REITs are Capitaland CICT, Ascendas AREIT, and Mapletree REITs (MINT, MLT, MCT). Technically, Syfe REIT+ is not a fund but a portfolio because it invests directly into the underlying REITs.

In contrast, VNQ tracks the MSCI US Investable Market Real Estate 25/50 index, with largest exposures to Specialized REITs (37.3%), Residential REITs (14.8%), Retail REITs (11.2%) and Industrial REITs (11.1%). The largest individual REITs are American Tower Corp AMT, Prologis PLD, Crown Castle CCI, Equinox EQIX, and Public Storage PSA.

Fees

Syfe’s fees are tiered according to the investment amount you have with them. For investment amount less than S$20K, the annual management fee is 0.65%. There are also SGX clearing and trading access fees but those are pretty small (adds up to ~0.04%). VNQ is much cheaper and only has an ETF expense ratio of 0.12%.

Syfe’s higher fees do come with many other benefits though, like no minimum investment, no lock-in, zero trading/brokerage fees, zero withdrawal fees, and free dividend reinvesting.

Other Considerations

Market Access. VNQ is listed on NYSE which you can access easily from any broker that offers access to US markets (though most will act as custodian for your shares). Syfe REIT+ though is a product solely offered on the Syfe Wealth platform.

Familiarity. For Singapore investors, we might be more familiar with the local real estate market and the names in Syfe REIT+. Since VNQ held REITs are all in the US with little if no properties in Singapore, we might not be familiar or even ever have heard of some of those REITs (I know I haven’t).

Platform. Syfe Wealth as a platform offers many other portfolios including Core, Satellite, Thematic, and Cash portfolios under one roof. Syfe makes it easy for you to move money around the portfolios as well, with no transaction fees (fees all included under the annual management fee). As for VNQ, that would depend on which platform/broker you decide to use to buy shares.

My Thoughts

The bulk of my real estate exposure (besides my HDB) are in VNQ and some S-REITs. However, I’ve put in some starter funds into Syfe REIT+ and may contribute more there. I may even consider selling individual S-REITs to put into Syfe REIT+ if I like the portfolio and platform.

I also like the idea of being able to automate regular investments into the Syfe platform through Cash+. In addition, REIT+ is denominated in SGD so I don’t have to worry about forex.

Ultimately, I think both will do well. No harm in even holding both, I guess. If REIT+ performance can continue to keep up with VNQ, I might lean more towards REIT+.

Disclosure: I’m long VNQ and invested in Syfe REIT+.

Referral Code

If you’re interested to sign up for a Syfe Wealth or Syfe Trade account, you can use my referral code SRPT47KQL to earn rewards listed below as long as you meet the qualifying criteria. Enjoy!

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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.

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