Japan yield hunters
Top of my mind, I think Mr and Mrs Watanabe will like this ETF!
I mean Mrs Watanabe is famous for being conversant with forex trading as a side income. So foreign exchange risk is not an issue since they are not "bei kambings" (white little lambs).
With negative interest rates back home, Japanese insurers and pension funds have been piling into Australian bonds as they continue their search for yield.
Currently, the Australia 10 year bond yield is around 2.25%.
Those Japanese investors who are more "garang" (aggressive) may want to spread some love into this REIT ETF as they can get double the yield at 4.5%.
Nothing ventured; nothing gained!
Emerging Markets Hedgies
The next group of investors who may be interested could be our neighbouring investors from Thailand, Malaysia, Indonesia; etc.
I mean those investors with home currencies that fall super fast whenever there's a risk off environment.
No need to look far. Just look how their currencies tanked during beginning of this year, taper tantrum 2013, and fiscal cliff end 2011, 2008/09 Great Financial Crisis, and of course the mother of all currency crashes - the 1997 Asian Financial Crisis!
Notice this ETF is also listed in USD? Make a wild guess why is this so?
Normally you have to "pay" to put hedges on; but this REIT ETF vehicle pays you a dividend instead!
Good, better, best or what?
Singaporeans not the main target group lah
First, competent retail investors won't bite. Not when we are already spoilt for choice with SGX listed REITs that yield more than 4.5%. Duh!
Secondly, those Panda and Koala bear Singapore stocks only "specialists" would lose their home-base advantage or edge.
I mean with 59% weighting in Australian REITs, unless you tell me you read the Australian press or economic news daily, tell me how you'll have an edge over that Australian investor who takes the opposite side of your position?
Who from Singapore will bite then?
Probably those Singaporean retail investors who salivate whenever they hear the word REITs. And when they hear ETF, they immediately associate it with "low cost".
Put both words REIT and ETF together, its "Buy!", "Buy!", "Buy!".
They can't help themselves. It's a Pavlovian response.
How to verify me
Come next week, when this SGX APAC Dividend Leaders REIT will start trading, look at the trading volume for both the USD and SGD tranches.
You can throw eggs at me if the SGD side has bigger trading volumes!
P.S This post is labelled as "Advertorial" since the kind folks at Phillip Capital Management treated some of us bloggers to free dinner last night.
Just give me a drink and I'll sing like a canary for you!