Singapore Real Estate Investment Trusts (S-REITs) are often considered a popular option for generating steady passive income, thanks to their ability to offer investors attractive yields – sometimes exceeding 8% (12-month average). Additionally, S-REITs also provide access to a portfolio of well-known real estate assets, from bustling shopping malls to business parks across the region.
The REITs’ Appeal
Here are some key factors behind the appeal of S-REITs:
Income Generation
REITs are known for providing attractive dividend yields, which can appeal to income-seeking investors. Even with fluctuations in performance, the income potential remains a significant draw. For example, the average yield for REITs is still noticeably higher than government bond yields with the 12-month average dividend yield of S-REITs at 8.1% on June 28, 2024 compared with the 10-year Singapore benchmark government bond yield of 3.2%, according to data of REITAs – the representative voice of the Singapore REIT sector.
Diversification
Investing in REITs allows investors to gain exposure to a diversified portfolio of properties without needing to buy physical real estate. This diversification can help mitigate risks associated with individual property investments.
Accessibility
REITs can be bought and sold like stocks, making them more accessible to average investors compared to direct property investment. This liquidity can be attractive, especially in a market with fluctuating performance.
Professional Management
REITs are managed by professionals who make decisions about property acquisition, management, and leasing, which can provide reassurance to investors who may not have the expertise to manage real estate directly.
However, despite their appeal, S-REITs have faced volatility in recent years, prompting investors to weigh their benefits against the market’s shifting dynamics.
Global Bonds and Dividend Stocks for Diversified Passive Income
For those seeking broader options beyond REITs to generate passive income, alternatives like global bonds and global dividend stocks may provide greater diversification and potentially higher returns.
According to data on the S&P Global Developed Sovereign Bond Index — designed to track the performance of local currency-denominated securities publicly issued by developed countries for their domestic markets — the 1-year total return stood at 9.22% as of September 18, 2024.
Meanwhile, the Dow Jones U.S. Dividend 100 Index – designed to measure the performance of high-dividend-yielding stocks in the U.S. – has a 1-year total return of 14.18% as of September 18, 2024.
Based on recent performance, both global bonds and dividend stocks have the potential to outperform the current returns of S-REITs.
But how can one tap into these opportunities?
Accessing These Opportunities Through Unit Trusts
One way is to invest through unit trusts, which provide access to a diversified portfolio of global bonds and dividend-paying stocks.
For example, Standard Chartered’s SC Invest portfolios provides investors access to multi-asset portfolios of funds/ETFs, guided by the Bank’s investment experts, including its Chief Investment Office (CIO).
The Income Portfolio offers clients investment exposure into a diversified portfolio of income generating assets such as bonds (54.2%), equities (39.1%) – including REITs, hybrids (5.7%) and money market / cash (1.0%) as of 30 Nov 2024.
The dividends and coupons of these assets help to support its distribution yield for SC Invest Income Portfolio which is estimated to stand at 6%*.
On the other hand, conservative investors who are seeking better stability might be more attracted to the SC Invest Cash+ Portfolio which allocates 84.8% into bonds and 15.2% in money market / cash as of 30 Nov 2024. The estimated distribution yield for the Cash+ Portfolio is at 5.25%*.
Find out more about investing in SC Invest Portfolios.
*The projected payout is calculated on an annualized basis using the latest distribution amount and ex-dividend Net Asset Value (NAV).
How to Start Investing in Unit Trusts
If you’re an existing customer ready to start investing in Unit Trusts, follow these 3 simple steps today:
Step 1: Log-in to your SC Mobile app
Step 2: Navigate to the ‘Invest’ tab, and tap on ‘SC Invest’
Step 3: Pick a portfolio that suits your investment needs
