Singapore’s UOB Asset Management launches first ETF in more than 10 years

Singapore’s UOB Asset Management has listed its first exchange traded fund in over a decade with the launch of a green-themed real estate investment trust product.

The UOB Apac Green Reit ETF claims to be the first in the world to provide investors with access to sustainable property investments in the Asia-Pacific region.

The manager’s previous ETF listing was in 2009, when it launched the United SSE 50 China ETF in Singapore.

The new fund seeks to replicate the performance of the iEdge-UOB Apac Yield Focus Green Reit Index, created jointly by UOBAM and the Singapore Exchange earlier this year to track 50 Reits listed in Australia, Hong Kong, Japan and Singapore. It focuses on Reits that have high-dividend yields and strong ESG performance in areas such as energy and water consumption, greenhouse gas emissions and green building certifications.

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Faizal Gaffoor, Singapore-based group chief marketing officer at UOBAM, said investor appetite had been “very strong” so far, as Singapore investors looked to Reits to supplement their passive income.

The ETF attracted in excess of S$80m ($58.5m) during the initial offering period.

There are five Reit ETFs on the Singapore Exchange. The NikkoAM-StraitsTrading Asia ex-Japan Reit ETF is the largest, at $244.5m in assets as of the end of October, according to data provided by Morningstar. The Lion-Phillip S-Reit ETF has assets of $174.1m, while the Phillip SGX Apac Dividend Leaders Reit ETF has assets of $14.2m.

CSOP Asset Management’s CSOP iEdge S-Reit Leaders Index ETF launched earlier in November.

UOBAM is hoping to capitalise on rising consideration of ESG factors in the property space, as well as growing investor appetite for sustainability and the overall growth of ETF investing in general.

Demand for office space across the region is expected to grow 65 per cent in the next decade to 1.35bn square feet, and UOBAM believes green office design will be a top consideration for tenants.

In addition to that, many larger institutional investors have certain mandates where they need to invest based on ESG factors, said Gaffoor.

“These are the investors that are showing a lot more interest in these kinds of products,” he said. “Having a green tilt helps us to differentiate and market his product more effectively.”

UOBAM claims that compared to the non-green Apac Reit Index, there is a 4 per cent improvement in greenhouse gas emissions, a 3 per cent improvement in energy consumption, a 7 per cent improvement in water consumption, an 18 per cent improvement in design, construction and renovation-focused green building certification, and a 11 per cent improvement in valid operational green building certification.

The Singapore government’s focus on building out the city-state as a sustainability hub, as well as on funding green public infrastructure, is also a key factor.

These efforts to encourage sustainable investing and promote ESG at the government level send a signal to institutional investors on what Singapore’s regulatory priorities are going forward, said Gaffoor.

“Given the fact that [the Monetary Authority of Singapore] and [Singapore Exchange] are doing what is necessary to educate investors in terms of their green plans, it bodes well for these investors to also follow suit looking for investments such as this,” he said.

ETF assets in Singapore-listed ETFs grew 57 per cent to S$8.6bn in 2020, and had reached S$11.5bn at the end of October, according to the Singapore Exchange.

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