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 ReitETF claims to be the first in the world to give investors 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 hopes to replicate the performance of the iEdge-UOB Apac Yield Focus Green Reit Index, created 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.
Singapore-based group chief marketing officer at UOBAM, Faizal Gaffoor, said investor appetite had been very strong, as Singapore investors looked to Reits to supplement their passive income.
During the initial offering period, the ETF attracted over S $80 m $58.5 m.
There are five Reit ETFs on the Singapore Exchange. The NikkoAM-StraitsTrading Asia ex-Japan ReitETF is the largest, with $244.5 million in assets as of the end of October, according to the data provided by Morningstar. The Lion-Phillip S-ReitETF has assets of $174.1 m, while the Phillip SGX Apac Dividend Leaders ReitETF has assets of $14.2 m.
UOBAM hopes to capitalize on rising considerations of ESG factors in the property space, as well as growing investor appetite for sustainability and overall growth of ETF investing in general.
Demand for office space in the region is expected to grow 65 per cent in the next decade to 1.35 bn square feet, and UOBAM believes green office design will be a top consideration for tenants.
Gaffoor said that institutional investors have certain mandates where they need to invest based on ESG factors.
These investors are showing a lot of interest in these kinds of products, he said. A green tilt helps us differentiate and market our product more effectively. A 4 per cent increase in greenhouse gas emissions, a 3 per cent improvement in water consumption, an 18 per cent improvement in design, construction and renovation-focused green building certification, and an 11 per cent improvement in valid operational green building certification are all the things that UOBAM claims to have improved in the compared to the non-green Apac Reit Index.
The Singapore government's focus on building the city-state as a sustainability hub and funding green public infrastructure is also a key factor.
According to Gaffoor, these efforts to encourage sustainable investing and promote ESG at the government level send a signal to institutional investors that Singapore s regulatory priorities are going forward.
Given the fact that the Monetary Authority of Singapore and the Singapore Exchange are doing what is necessary to educate investors in terms of their green plans, it bodes well for these investors to also look for investments such as this, he said.
The Singapore Exchange said that ETF assets in Singapore-listed ETFs increased by 57 per cent to S $8.6 billion in 2020 and had reached S $11.5 billion at the end of October.
Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to industry trends.