Local property (REIT) ETFs

Simon BrownETF Blog, Latest



Last week we covered the offshore property ETFs listed in the JSE and this week we’ll look at SA property (REIT) ETFs . Dividend yields are better but this is a much smaller and less diverse sector. Locally it really is all about office, retail and industrial (logistics) with a small bit of of residential and storage.

The Satrix and 1nvest are largely the same in that they track a local index (Satrix using the S&P version which is capped at 10% for any stock). The 10x Investments uses a bespoke methodology that uses dividend yield to weight stocks. This ETF came about as then managers, CoreShares, merged two of their REIT ETFs, a generic SAPY ETF and a top ten equal weighted ETF into this one new REIT ETF.

1nvest SA Property ETFSAP 0.29% 6.0% (quarterly) Track the SA Listed Property Index (SAPY), as closely as possible.
10X SA Property Income CSPROP* 0.43% 6.8% (quarterly) The SA Property Income Index is designed to measure the performance of large SA REITs with an emphasis on higher yielding companies.
Satrix SA Property STXPRO* 0.33% 7.4% (quarterly) Track the value of the S&P SA Composite Property Capped Index.

The five year returned (excluding dividends) are all ugly with CSPROP -31%, ETFSAP -32% and STXPRO off 42%. Below is the three year (excluding dividends) returns looking better and add in decent dividend yields and investors have done well here since November, earning dividends alone the way.

I do like local property, yes office remains under pressure, but aside from that valuations are decent with good discounts to net asset value (NAV), decent yields and improved loan to value (LTV) levels.

With the higher, and taxable, yields they also make a great inclusion into your tax-free account to avoid that tax.

BUT, is there value? I interviewed Daniel King: Merchant West Investments and he’s cautious.

Simon Brown

* I hold ungeared positions.

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At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.

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