Asia Pacific real estate investment trusts (REITs) offer investors stable returns and income, lower volatility than most other major asset classes and the potential for portfolio diversification. REITs are collective investment schemes that enable investors to own a portfolio of commercial real estate. Traditionally available only through direct investment to large, long-term institutional investors, these property types include office, retail, industrial and hospitality across various markets.
Stable Income & Returns
Asia Pacific REITs have delivered consistent total returns, outperforming the broader equity market in the region over the long term. These returns are backed by attractive dividend yields and long-term capital appreciation. To enable investors to capture the potential of Asia Pacific REITs and diversify their portfolio, we offer the United Asia Pacific Real Estate Income Fund (the “Fund”). Backed by strong and stable dividend yields of the Fund’s underlying portfolio, the Fund offers an attractive monthly income distribution of 4.5% p.a1 (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.).
REITs are required to distribute at least 90% of its taxable income as dividends to its shareholders annually. The dividends are backed by the stable stream of contractual rents paid by the tenants of the properties in the portfolio.
Source: Bloomberg, as at 31 March 2023
Arising opportunities as economies reopen post-COVID-19
Even as we expect heightened geopolitical risks and concerns over stagflation, the Asia Pacific region remains in various phases of economy reopening and is poised to benefit from post-COVID-19 economic growth. The overall tenant demand continues to see improvement across most sectors and the leasing momentum is expected to pick up.
Growth is well underpinned by cyclical uplift in rents from the normalisation in economic activities and abatement in rental waivers.
Benefits in an inflationary environment
Despite macro-level headwinds from central bank interest rate rises and rising bond yields, the current market environment remains conducive for REITs.
An inflationary environment, which is associated with economic growth, is generally favourable to the REITs sector from the perspective of rental income growth and appreciation in asset capital values. Past precedents suggest that REITs typically perform well following initial interest rate hikes. Sector outperformance trend following rate liftoff is consistent across different markets notably in Singapore, Australia and Japan.
Offers portfolio diversification
REITs offer diversification benefits to a portfolio. Real estate assets often perform differently than traditional stocks and bonds; allocating some into a portfolio could potentially improve the overall risk-adjusted return.
Source: Morningstar Direct. Time Period: January 2009 - March 2023. Equity - MSCI AC World Index, Bonds - Bloomberg Global Agg Index, APAC REIT - S&P Asia Pacific REIT Index.
The Fund invests in different types of REITs across the APAC region, and aims to provide investors stable returns and income through sustainable distribution growth.
The Fund provides investors the opportunity to capitalise on the positive outlook for the real estate sector in Japan, Australia, Singapore and Hong Kong. Retail and Office REITs are two of the key beneficiaries in the reopening of economies post-COVID-19.
Environmental, Social and Governance (ESG) enhanced
The Fund adopts UOBAM's sustainable investment framework, which includes investing in companies with better ESG scoring. A Green REIT status is accorded to REITs that score well under the 'Environment' pillar of the key ESG factors. A Sustainable REIT typically has strong sustainability performance across all three pillars in aggregate. The ESG factors are fully integrated in our investment process.
|Fund Name||United Asia Pacific Real Estate Income Fund|
|Investment Objective||To seek total return consisting of income and capital appreciation over the medium to long term by investing primarily in Real Estate Investment Trusts (“REITs”) listed in the Asia Pacific region (including Japan, Australia and New Zealand).|
|Sub-manager||Sumitomo Mitsui DS Asset Management Company, Limited. (for Japan market)|
|Reference Benchmark||S&P Asia Pacific REITs Index (from inception to 30 June 2022)
FTSE EPRA Nareit Asia Pacific Index (1 July 2022 onwards)
|Fund Classes Available2||Class SGD Acc; Class SGD Dist; Class USD Dist|
|Subscription Mode||Cash and SRS|
|Minimum Subscription||Class SGD Acc/SGD Dist: S$1,000 (initial)
Class SGD Acc/SGD Dist: S$500 (subsequent)
Class USD Dist: US$1,000 (initial)
Class USD Dist: US$500 (subsequent)
|Subscription Fee||Currently up to 5%, maximum 5%|
|Management Fee||Currently 1.5% p.a; maximum 2% p.a.|
|Dealing Frequency & Deadline3||Generally every business day, on a forward pricing basis up till 3pm (Singapore time)|
|Distribution Policy1||4.5% p.a. monthly*
*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.
1Distributions will be made in respect of the Distribution Classes of the Fund. Distributions are based on the NAV per unit of the relevant Distribution Class as at the last business day of the month. The making of distributions is at the absolute discretion of UOBAM and that distributions are not guaranteed. The making of any distribution shall not be taken to imply that further distributions will be made. The Managers reserve the right to vary the frequency and/or amount of distributions. Distributions from a fund may be made out of income and/or capital gains and (if income and/or capital gains are insufficient) out of capital. Investors should also note that the declaration and/or payment of distributions (whether out of capital or otherwise) may have the effect of lowering the net asset value (NAV) of the relevant fund. Moreover, distributions out of capital may amount to a return of part of your original investment and may result in reduced future returns. Please refer to the Fund’s prospectus for more information.
2Investors should refer to the Fund’s prospectus for more details on the different classes available. Please check with our distributors on the availability of the Fund Classes.
3Please check with the distributor or refer to the Fund’s prospectus for more details.
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This document is for general information only. It does not constitute an offer or solicitation to deal in units in the Fund (“Units”) 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 is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. 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 UOB Asset Management Ltd (“UOBAM”) and any past performance, 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 read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing.
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. Applications for Units must be made on the application forms accompanying the Fund’s prospectus.
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