Hi guys,

Is it more advisable to buy REIT equity fund (PFEPRF) or individual REIT? Currently eyeing on PAVREIT. Advice on pros and cons?

dewVP,

Buy unit trust only if you have no experience and no time to monitor. If you want to maximise your profit, buy the REIT directly.

in addition to what Jordy mentioned above,

in my humble opinion:
1. Keeping in mind the amount U wish to invest and consistency
eg.
a. If U have only $100 to invest per month AND want to consistently accumulate every month, rather than accumulating for 6 mths to 1 year and buy, then cost effective would be mutual fund.
b. If U have only $100 to invest per month AND willing to accumulate the amount until about $3K to buy cost effectively, then direct REITs would be better.
c. Of course if U have several thousands per month, cost effective accumulation would be direct as well.

2. Keeping in mind control of specific countries' REITs and sub-asset classes (for Asset Allocation / sub-asset allocation)
eg. xx% Plantation, xx% office/industrial, xx% residential, xx% Hospital, etc
eg. xx% MREITs, xx% SREITs, xx% AUREITs
Best would be direct REITs

Just a thought

This post has been edited by wongmunkeong: May 5 2012, 09:33 PM

It is 2 different thing.
One is equity fund that can buy property stock, reit, property related stocks.
One is purely Reit aka the underlying stocks income is based on rental only.

Q capital dividend payment is through E-dividend or cheque?

E-div.

Thanks cherroy.

My uncle told me that if one is just looking for dividend/fix income purpose with slightly higher risk, one can just enter the REIT market anytime and hold on to it for medium to long term. He told me not to be so worry about the price fluctuations. This is after I told him I am quite wary at the moment to enter the market because of high valuation of KLSE at the moment and the uncertainty over the pending general election.


What do you think? Would you diversify 20% of your cash into REIT? Don't worry, I won't blame you for any misfortune but would like to have your thoughts on this.

or anyone else with opinion?

This post has been edited by soul2soul: May 7 2012, 03:56 PM

Invest in reit is about economy and property market, not about general election.
There is nothing to worry about pending general election.

It is preferably to enter reit at slightly right time, to get better valuation and yield.
Reit price generally do not fluctuate much.

The more important is to look on the reit underlying properties portfolio, and ability to lease.
Reit is not automatically must be good, and can buy and hold over the long time, and automatically give you good return.
There were poor reit performance as well.
Some study on the reit is needed.

Diversify 20% cash into reit?
I already owned a number of reit for number of years already...

Yup! I believe that I am under the category he stated. Not having the time the monitor. Do you know the reason why 2009 stated a return of 20%+ but 2010 only yields 1%?

I too noticed that PFEPRF don't distribute much of a dividends. So I assuming that PFEPRF is more of a ''capital gain'' equity fund instead of the usual distribution+capital gain?

I may have used the wrong terms that will cause misunderstanding. Apologize in advance.

DewVP, search through and checkout the Fund Investment corner http://forum.lowyat.net/topic/690951
and Public Mutual v3 http://forum.lowyat.net/topic/2007814
There are plenty of discussions/ideas on "distribution" (not "yield") by a mutual fund.

BTW, personally, i'm in PFEPRF (simple diversification + exposure to foreign REITs which i've no time to eye/monitor like China, Korea & Indonesia) and direct REITs too . Thus far, since everything bombed end 2008/early 2009, PFEPRF has been excellent VS other "equity funds" i've been doing quarterly together with PFEPRF, thus easily comparable in time value of $ & returns.

If U checkout Public Mutual's PFEPRF's last quarterly fund review, it held 33% MY, 19.26% SG, 17.78% IND, 10.69% CH, 5.76% TH, 0.72% PH and 0.67% Korea
The top 5 holdings were
IGB Bhd (like Cherroy mentioned, Property Stock, not REIT)
KrisAssets Holdings Bhd
CapitaMalls Malaysia Trust
Indonesia Gov Bond 9.50%/2031
Axis REIT

This post has been edited by wongmunkeong: May 7 2012, 08:25 PM

If REIT do not fluctuate much, and I invest in a REIT equity fund. How can I make profit out of it? The REIT which I'm looking at do not distribute much distributions (which means units not increasing). So just possible capital gain?

Reit does give distribution, so when fund received distribution time (while reit ex-d price still the same), NAV of the fund will increase.

Property and reit equity fund is not the same with one invest purely in reit.
Equity fund can invest in ordinary property development (normally).

Yeap, TWR at RM1.4 is making me happy. For REIT, I actually will be making a profit even by selling the stock alone, not to mention the dividend payouts I have received.

Are you talking about REIT or REIT Equity Fund?

I know distributions is not always good. I'm not trying to sound like I want distribution, but just trying to clarify.

REIT. TWR is a REIT stock. Distribution for TWR is currently at 8% or so for me so it is quite good, I cannot say I looked at equities REIT equities.

I think you are looking at REIT and the price movement? It does not really work that way, as REIT's returns are fairly static and people look at the DPU (dividend per unit), you will see the price remains static after a certain level as the returns per unit is not considered "strong", i.e if TWR's price keep rising until the dividend they are paying will only yield someone only say, 4% at a certain price, demands for the stock at that price will be less thus the price can't push higher.

You can check out the Dividend yield Per Unit here: http://mreit.reitdata.com/, and you can see most of the performing REITs will give you a stable 6-8% ROI. I am double happy simply because my entry price for TWR was much below the current RM1.4 per unit, so I am not only getting a decent dividend yield, but also can be assured to gain a little on capital gains if I do intend to sell.

I wish to answer your question mathematically:

I'll select Treynor ratio as the basis of comparison.

Treynor ration = (Fund rtn - risk free rate)/Beta of the fund vs its benchmark

For PFEPRF = (27.69 - 3)/1.15 = 21.46

For Sunreit = (28.56 - 3)/0.864 = 29.58

The above value is taken for 3 years ex-post.

I can't use Pavreit as comparison because it is too new hence do not have statistical data to back up. I'll use a similar reit aka Sunreit as a proxy.

Treynor ratio measures the risk adjusted performance of the investment vehicle relative to their benchmark and Sunreit wins over PFEPRF.

So WMK, quickly quickly switch your PFEPRF to Sunreit lor....

Xuzen

This post has been edited by xuzen: May 8 2012, 03:21 PM

Dont lar like that bro.
I'm into PFEPRF as a means to get into overseas REITs and property developers + easy diversification, not optimizing returns.

If i go that way, "pound for pound" returns, thus far, PFEPRF and even other MREITs i held doesn't beat my held BSDREIT leh - sell everything and "sai lang" into 1 REIT meh

why pav reits going up and up? can still buy?

IMO u should save some bullets for the upcoming IGB reits ( Midvalley & Garden mall)..

register for IPO.

Thanks!

Qcap looks very delicious now at 1.12...

any idea when is the dividend payout for Q cap?