Property Fund / REIT

Property Fund / REIT  

 

- Safe haven with over 7% yield 

 

Amidst vulnerable market and decreasing bond yields and deposit rates, it has become harder to find an investment that gives good returns. For those with a moderate risk tolerance, however, property funds (Type 1 Fund) and REIT are an interesting choice. As of June 22, 2015, there are 55 funds with total market capitalization of B333bn; 36 of which are freehold and 19 are leasehold, with average dividend yield of 7.3% p.a. (7% for freehold and 8.2% for leasehold). Risk from a decline of a unit price is also low; the beta of only 0.097x reflects very low fluctuation of the unit price when compared with SET Index. 

 

- Dividend tax exemption, strong point of Infra Fund 

 

Another choice for a constant yield that is higher than a deposit rate is Infrastructure Fund. Infra Fund is established to raise funds for 10 types of public and private infrastructure projects, which are rail transportation, electricity, water supply, toll way, airport, deep seaport, telecommunication, alternative energy, water management system, and natural disaster protection system; its revenues come mainly from operations of the projects held by the fund. After deducting expenses, at least 90% of the remaining income will be paid as dividend for unit holders, which is the same strategy as property funds and REIT. However, a strong point Infra Fund has over those funds is a dividend tax exemption for local retail investors for 10 years since the first day of the fund establishment, compared with 10% withholding tax charged by Type 1 Fund. 

 

- CPNRF, POPF, SPF, TFUND recommended 

 

We recommend investing in the following property funds and REIT, which have stable income generation from good assets and high liquidity: CPNRF, POPF, SPF (leasehold), and TFUND (freehold); average dividend yield of 7-8% can be expected.