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05-01-2016, 11:01 PM
(This post was last modified: 05-01-2016, 11:02 PM by CY09.
Edit Reason: edits
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IMO, Sg reits are not a great investment.
Commercial and retail reits is like holding a portfolio of 90 year lease properties. At the end of it, the value will be zero. And after a few rounds of new property additions, you face the risk of dilution in stake because there are placements or forcing ppl to take rights.
The upside is that every year you get about 5-7% dividend yield. The annualised returns is not great, about 5-6% only, assuming you hold throughout your lifetime. Holding the STI ETF over the long run is a better prospect, averaging 6+-7% p.a.
The same applies to industrial reits.
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(05-01-2016, 11:01 PM)CY09 Wrote: Holding the STI ETF over the long run is a better prospect, averaging 6+-7% p.a.
What about comparison in terms of risk? I can choose my reit, but for an ETF I don't get to choose the component stocks. Any idea what happens when one or more of the component stocks goes bankrupt? Thanks.
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05-01-2016, 11:43 PM
(This post was last modified: 05-01-2016, 11:57 PM by CY09.
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It is true that choosing your own reit (if you are a good stock picker) will lower bankruptcy risk. However, it increases concentration risk as well.
STI ETF reduces concentration risk, but you may run the risk of investing into areas you are not aware of due to the 30 components and being unable to pick the companies.
Perhaps to put this to bed, an extensive research may have to be done, comparing the STI ETF vs every single reit individually since their day of inception, including dividends and rights (it will be time consuming and difficult).
I am inclined to believe doing such a research may result in A-reit, Capmall Trust and Fraser CT outperforming the SPDR STI ETF. But again it is worth noting that REITS assets have declining leases while SPDR STI components hold businesses that do not rely on properties with diminishing leases
*Drizzit, if you are reading this, could shed some lights on how each reit performed vs STI in terms of IRR factoring all the rights issues, placements and dividends. For example, Capita china vs STI assuming both started on the same date of 8 Dec 06 (IPO date on capita), Keppel REIT etc. Understand you did some research on them on your blog
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Coincidentally Ascendas and Capitland Mall reits are part of the STI index.
A good method is to identify good STI component stocks and buy into them when they underperform the STI basket of stocks. In this way you are buying at "lower" price point all the time and probably can outperform the STI index in the long run.
Currently oil/gas/marine and property stocks are out of favour. So pick a few good ones in STI index and accumulate them.
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06-01-2016, 05:00 PM
(This post was last modified: 06-01-2016, 05:01 PM by weijian.)
(05-01-2016, 11:27 PM)touzi Wrote: What about comparison in terms of risk? I can choose my reit, but for an ETF I don't get to choose the component stocks. Any idea what happens when one or more of the component stocks goes bankrupt? Thanks.
For most of us (myself included), having the privilege to choose our own stocks for investment just gives an illusion of control (another very similar heuristic would be endowment effect, where we assign more value to the things we own). I hope you don't believe that choosing your reit will reduce the risk (your first and 2nd sentence). The S&P500 has 500 stocks compared to the STI's 30, so from this reasoning, it will be less appealing to buy the S&P500, an index which is a hedge fund manager killer and overperformed the STI by a large margin over the last 7-8years?
Bankruptcy generally happens in stages. A component stock needs to satisfy a certain market cap and trading volume. So I reckon the stock will get kicked out of the Index on its way down, either due to market cap (decreasing share price) or trading volume (suspension), and replaced by the reserve in waiting during the periodical review before it actually goes bankrupt.
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I agree that picking an ETF is safer in terms of risks, however it is hard to believe that a reit is a bad investment. If it is, then owning investment properties are bad as well? I have witnessed and heard of people made their fortune from real estate investment, but making a fortune via ETF is seems never in existence. I think the keys to great investment is the basic principle of buy low sell high. Some of you think that reit is bad because of the assets price bubble and the rising interest, while in the opposite situation reit is indeed a great investment imo.
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Reit coy can kaput so is any coy. The only main difference is Reit will ask you for money from time to time more likely than any coy. So be prepared to sell your NIL P. R. or get diluted if you have no reserve capital on standby.
The other alternative is to buy only when a Reit coy has a RTS ISSUE.
Then TAN KU KU LOL!
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Vested in SPH & Keppel D. C.(since IPOS) reits only
May buy some other reits in future.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Owning a rental property is no where better than owning a REIT. The only good thing about owning a rental property (FH) is no matter what there is a residue value. A REIT like any coy can go to 0000. No?
But for asset allotment or risk management for people who needs it, then what's there to say?
Too much money lol?!!!!
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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09-01-2016, 01:23 PM
(This post was last modified: 09-01-2016, 01:30 PM by Ray168.)
(09-01-2016, 11:40 AM)Temperament Wrote: Reit coy can kaput so is any coy. The only main difference is Reit will ask you for money from time to time more likely than any coy. So be prepared to sell your NIL P. R. or get diluted if you have no reserve capital on standby.
The other alternative is to buy only when a Reit coy has a RTS ISSUE.
Then TAN KU KU LOL!
I agree with AK's view on Reits placement. As long as DPU is maintain, I am OK if the share is "diluted".
Quote:http://singaporeanstocksinvestor.blogspo...8645163934
I have seen some well run REITs which did private placements to do acquisitions and were able to maintain the DPU. Although I would prefer rights issues so that I could take part in the enlarged capital base, not everyone likes rights issues for various reasons.
Ultimately, if the distribution yield on my investment is unaffected, it doesn't matter if the REIT has more unitholders and if we have to share the higher distributable income with more people.
Investment Moat share a good post on lease expiry
REITs Land Lease Renewal and Extension
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