Manulife Asset Management launches world’s first retail Syariah Global REIT Fund
KUALA LUMPUR: Manulife Asset Management Services Bhd (MAMSB) recently announced it has launched the first Shariah global real estate investment trust (REIT) fund in the world available to retail investors, the Manulife Shariah Global REIT Fund.
The fund invests in syariahcompliant real estate investment opportunities from across the globe, providing Malaysian investors with more diversified sources of medium to long-term returns.
Apart from the traditional investments into residential, retail, office and industrial REITs, its global nature captures potentially higher growth opportunities stemming from “new economy” sectors like e-commerce, selfdriving cars, Internet of Things, and other technology related sectors.
The backbone of all these new technologies and businesses is the demand for infrastructure build-out including data centers, telecommunication cell towers and warehouses in which the Fund can invest. The fund can also have exposure into the healthcare industry such as medical centers and retirement homes, which are areas of growth in face of the world’s aging population.
“Asian investors traditionally have good appetite for property investments due to the potential long-term income and capital appreciation, as well as for inheritance purposes,” MAMSB chief executive officer Jason Chong said.
“Investing in bricks and mortar, however, limits them to only a few physical residential or commercial assets typically in one or two jurisdictions, while global REITs can expose them to a wider universe of property investments including large-scale infrastructure projects that are typically off limits to individual investors.”
When compared to physical properties, REITs are free of worry of illiquidity. REITs are also proven a more resilient asset class throughout different stages of an economic cycle. Historically, syariah REITs have also generated higher total return than conventional REITs, partly thanks to the syariah screening requirements that limit the companies’ debt-to-equity ratio to 33 per cent.
Between September 2013 and end of December 2018, Ideal Ratings Global REITs Islamic Select Malaysia Index (the fund’s benchmark) recorded a total return of 67 per cent, compared to the S&P Global REIT Index return of 36 per cent.
“Global REITs can withstand different market conditions largely due to its lower correlation with other asset classes. In fact, dividend yields from global REITs have been higher than 10-year government bond yields, and major REIT markets such as the US, Australia, Singapore, and Hong Kong have all performed strongly in past US interest rate hike cycles,” Chong said.
The fund will invest a minimum of 70 per cent to a maximum of 98 per cent of its assets in listed Islamic REITs around the world. A minimum of two per cent up to a maximum of 30 per cent of its assets will be in Islamic liquid assets, which comprise of Islamic money market instruments and Islamic deposits with financial institutions.
On outlook for the REIT market, head of Retail Wealth Distribution Ng Chze How said that at the moment, they remain optimistic about REITs in the US, Hong Kong, and Singapore.
“In the US, economic growth has continued to outperform expectations, which has led to favorable real estate fundamentals, particularly for retail and IT infrastructure sectors. Hong Kong REITs are currently at attractive valuations, and we see retail property benefiting from improvements in real estate fundamentals. Singapore REITs continue to offer above average dividend income and is a good insular to global macroeconomic uncertainty.”
“However, we are cautious of the UK and some emerging markets REITs. The only certainty about Brexit is that it has and will likely continue to hamper economic growth, and the office sector is especially hard hit as companies look to relocate to within the European Union.
Emerging markets such as Mexico and Thailand have riskreward profiles that are not that compelling,” Ng concluded.
The fund is suitable for investors who wish to have investment exposure through a diversified portfolio of REITs globally, seek regular income and potential capital appreciation over the medium to long-term, and prefer syariah-compliant investments.
The fund aims to distribute all or part of its distributable income on a semi-annual basis. The classes that are offered for subscription by the fund are RM Class and USD Class at RM0.5000 and US$D0.5000, respectively, during the initial offer period from March 12, 2019 to April 1, 2019.
The minimum initial investment amount for the fund is RM1,000 or US$1,000, and the minimum additional investment amount is RM100 or US$100. The fund is distributed by unit trust consultants of MAMSB.