Latest / Investor Exchange / UOB APAC Green REIT ETF Delivers 12.36% Return In 2025 Annual Financials

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UOB APAC Green REIT ETF Delivers 12.36% Return In 2025 Annual Financials · Investor Exchange

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  Music.
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  30, 2025. Yeah, lots to unpack here. Absolutely.
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  Our goal is to really distill the key financial performance,
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  understand the economic backdrop that shaped those numbers, and then look ahead
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  at the strategy for this ESG-focused fund.
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  Right. And just for context, remember, this ETS isn't just any property fund.
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  Its job is to track the IEDGE UOB APAC Yield Focus Green Read Index.
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  So it's all about yield, but with a very specific environmental performance
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  screen across the Asia-Pacific region. OK, let's jump straight into the financials
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  then, because the story is, well, it's quite dramatic, a big reversal,
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  but maybe some tension underneath.
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  So for the 12 months ending June 30th, 2025, the fund itself posted an annual
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  return of 12.36 percent. Pretty solid number.
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  It is solid. Yeah, especially given how volatile real estate has been.
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  But as you hinted, there's a nuance. The benchmark index it tracks,
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  that was actually up 14.27 percent over the same period. Oh, OK.
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  So the fund tracked it reasonably closely, but did lag slightly,
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  left a bit of performance on the table, maybe due to costs or tracking differences.
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  Exactly. It shows the underlying strategy worked, you know, caught the recovery wave.
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  Wasn't a perfect mirror of the index game. Now, here's where context is crucial,
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  especially for anyone following this fund long-term.
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  That 12.36% game looks great in isolation, but you have to set it against the history.
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  The longer-term compound returns are still, well, negative.
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  The three-year annual compound return is minus 0.93%. Ouch. Yeah.
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  And since it launched back in November 2021, the fund's overall compound return is still down 5.24%.
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  So that positive year was really needed, wasn't it? Less of a sudden,
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  boom, more like starting the climb out of a hole dug in previous years.
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  Exactly. And you see that starkly in the statement of total return.
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  Fiscal year 2024, they reported a deficit, a loss of over $4 million.
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  Significant loss, yeah. And then boom, fiscal year 2025, this report shows a
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  total return of over $5.6 million.
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  That's a swing of almost, what, $9.6 million? It's a massive turnaround.
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  And the report nails down the reason.
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  Net gains on the actual investments. They made $3.75 million from their holdings this year.
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  Compared to losing over $6.3 million on investments the year before.
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  Precisely. So the core driver was simply that the underlying REITs,
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  the actual properties and assets in the portfolio, recovered significantly in market value.
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  The assets just bounced back. The fair value shot back up, pulling the whole
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  fund's bottom line from red to black. Okay, but wait.
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  This financial rebound, this asset recovery, it happened while the fund itself
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  was shrinking dramatically.
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  Ah, yes. That's the other side of the coin. The report shows net assets attributable
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  to unit holders fell from around $56.4 million down to just $27.9 million.
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  Almost halved. It's a huge drop in AUM, yeah. And looking deeper, the numbers are stark.
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  Redemptions, money pulled out by investors totaled over $32 million.
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  32 million out. While subscriptions, new money coming in, were tiny, just $241,000.
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  Barely anything, comparatively. So how does that work? The investments are doing
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  great, values are recovering, but unit holders are running for the exits.
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  That's the paradox, isn't it? And it tells you a lot about investor sentiment, I think.
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  It suggests that huge outflow wasn't really about this year's performance.
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  It was likely a reaction to the previous bad years. Ah, like a delayed reaction,
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  people finally giving up after the earlier losses.
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  Could be panic selling held over, maybe tax loss harvesting from the 2024 losses,
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  or, you know, perhaps some big institutional players decided to rotate out before
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  this recovery really took hold.
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  Interesting. So the investors who stuck around actually benefited disproportionately
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  from those exits in a way. Absolutely.
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  Because the underlying asset gains were spread over fewer units.
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  You see that net asset value, the NAV per unit, actually rose quite nicely from
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  about 66 cents, 0.661, to over 71 cents, 0.7134 heads.
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  So good for the loyalists, but a headache for the fund manager dealing with that shrinking scale.
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  Definitely. A success on the investment side, but a challenge on the asset gathering
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  and retention side. They've got a job to do rebuilding that confidence, clearly.
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  Okay, so we've established the financials. A big recovery driven by asset values
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  happening alongside a major investor outflow.
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  Now, let's peel back the layer on why those assets were covered.
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  What drove the performance?
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  Well, the report points to specific holdings that really helped deliver that
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  12.36% gain. Like which ones?
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  They mentioned Link Reit from Hong Kong. That was a strong contributor.
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  And then several big Australian names like vicinity centers and Stockland Reits.
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  Okay. And also Capital and Integrated Commercial Trust out of Singapore.
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  A good geographical spread among the winners. Which brings us to the wider economic picture.
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  The report paints this complex sort of mixed macroeconomic scene,
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  but somehow Asia's equity markets, including REITs, held up well.
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  What was going on? The real standout, according to the report, was North Asia.
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  South Korea in particular just rocketed.
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  Nearly 30% equity returns over six months.
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  Wow, what drove that? Mostly the tack and semiconductor boom, it seems.
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  Plus, maybe some easing of political uncertainty there helped sentiment.
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  Okay, but how does a tech rally specifically boost, you know,
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  property trust? Are they building lots of semiconductor fabs?
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  Not exactly like that, usually, but it's more indirect.
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  First, general market optimism, a risk on mood, tends to lift evaluations across
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  the board, including REITs. Right. A rising tide effect. Exactly.
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  And second, sustained tech growth does fuel demand for certain types of real estate.
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  Think logistics centers for all those components, modern office space,
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  and increasingly things like data centers, which can be held in REIT structures.
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  So that strong regional growth provided a tailwind.
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  Makes sense. But outside North Asia, it sounds like things were more complicated.
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  Singapore, for instance. Yeah, Singapore had decent GDP in the first half of the period.
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  Apparently, businesses were front-loading exports trying to get ahead of potential U.S. tariffs.
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  A tactical move. But the report flags that this momentum might fade.
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  They talk about payback effects, the inevitable slowdown after the surge,
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  plus the impact of retaliatory tariffs potentially hitting those same exports later in 2025.
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  So, a bit precarious. And Australia. Yeah. A similar story.
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  Kind of. The market there rallied into June, partly on hopes of rate cuts,
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  which is always good news for leets.
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  But looming trade war uncertainty is seen as a drag on consumer spending and
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  business investment, casting a shadow.
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  Okay. And Hong Kong. Always a key market for APAC REITs. Hong Kong had strong
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  exports and investments on paper, but there are structural issues mentioned.
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  Local residents are apparently spending more across the border in mainland China now. Oh, interesting.
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  And spending by visitors from the mainland is weaker than it used to be.
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  Both factors create headwinds for retail property owners there.
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  So a really mixed bag across the key regions. And looking at the funds allocation
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  as of June 30th, where are they placing their bets?
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  Australia's the biggest slice, about 40.15%. Then Japan is significant at nearly
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  32%. And Singapore comes in third at just under 20%. So heavy concentration
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  in those major developed markets.
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  Got it. Now let's shift gears to the other core part of this fund,
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  the G in green rate, the ESG angle.
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  Right. The dual mandate. It's not just about tracking the index financially.
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  It's about doing it with a portfolio that has demonstrably better environmental characteristics.
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  The report says they have 98.4% alignment on that front.
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  And they use something called the Green Impact Dashboard, the GID,
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  to show this. How does it actually measure the greenness compared to,
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  say, a standard APAC re-index?
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  That's where you see the tangible difference.
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  The GID metrics show some pretty
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  significant improvements versus a broad non-green benchmark. Like what?
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  Well, for scope 1 and 2 greenhouse gas emissions, the portfolio is apparently 29% better.
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  Okay, quick reminder for us non-ESG experts, scope 1 and 2. Sure.
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  Scope 1 is direct emissions from burning fuel on-site at the properties.
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  Scope two is indirect emissions, mainly from the electricity they buy to power the buildings.
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  So a 29 percent improvement there points to much better energy efficiency or
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  cleaner energy sources in the buildings they hold. That's substantial.
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  What else? They also report a 27 percent improvement, meaning lower energy consumption overall.
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  And a really big one, a 34 percent improvement in operational green building
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  certification. 34 percent.
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  So significantly more of the buildings in their portfolio have achieved recognized
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  green certifications for how they operate.
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  Exactly. It shows the selection process, which uses things like Graspi assessments.
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  It's a global benchmark for sustainable real estate is working.
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  It's actively tilting the portfolio towards REITs that manage their environmental footprint better.
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  That's the whole point, the key differentiator. And this isn't static.
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  They rebalanced the underlying index.
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  The report mentions a review in March 2025.
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  Right. They kicked some REITs out, like Keppel DC REITs and Fraser Centerpoint
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  Trust from Singapore, for example.
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  Maybe they didn't meet the evolving green standards. Presumably.
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  Or maybe their scores dipped relative to peers.
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  And they added others, like Atan Prime Realty and Embassy Office Park's REIT from India.
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  So it's an active process to maintain that green focus. Okay. Final section then.
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  The outlook. Where do things go from here? After that strong,
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  albeit volatile year, the manager sounds pretty upbeat.
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  They do. They talk about a potential sector re-rating for REITs coming within
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  the next 12 months. They describe current valuations as compelling.
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  Compelling valuations. That sounds bullish. It is.
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  Their optimism seems largely based on the macro view, particularly the idea
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  that borrowing costs are stabilizing.
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  That's huge for REITs, which rely heavily on debt.
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  Stable or falling REITs make their financing much easier. And they expect earnings to grow, too.
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  Yeah, through a mix of organic growth, like rent increases, and maybe some strategic acquisitions.
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  But, and there's always a but, if valuations are so compelling and the debt
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  picture is improving, why do they immediately turn around and flag some major risks?
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  We need that balanced perspective. Good point.
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  The risks they highlight are significant and mostly external,
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  things they can't really control. Such as?
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  Tariff overhangs and export controls. Basically, the ongoing trade tensions,
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  which they expect will disrupt regional trade and investment,
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  and just the general cloud of geopolitical uncertainties.
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  So it's like the internal financial mechanics for REITs look better,
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  but the external world looks risky. That seems to be the tightrope they're walking.
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  The strategy, they say, is to keep using their screening process looking at
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  fundamentals, valuations, to find REITs that can navigate this.
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  They want companies with sustainable recovery paths, low financing risks,
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  and that combination of yield plus growth.
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  And for income investors, is there still a focus on dividends?
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  Yes. They reiterate the aim to provide a 4% dividend yield per year,
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  paid out semi-annually, so that income component remains a stated goal.
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  OK, so let's try to wrap this up for our listeners.
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  We've looked at the UOB APAC Green REIT ETF's latest year. What's the core story?
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  It seems to be a year of dramatic financial recovery, a big rebound into positive territory for FY 2025.
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  Driven largely by recovering asset values, particularly helped by that surge
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  in North Asia in a sense that borrowing costs were stabilizing globally.
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  It managed to erase that nasty deficit from the year before.
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  But crucially, this happened while investors were actually pulling huge amounts
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  of money out of the fund, a real disconnect between the asset performance and
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  perhaps investor confidence based on past experience.
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  Right. And we also saw the fund sticking to its green mandate,
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  delivering significantly better environmental metrics, lower emissions,
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  less energy use, more certified buildings compared to the broader market.
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  That part seems to be working as designed. So looking forward,
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  the manager sees compelling value, thinks REITs could re-rate higher thanks to stable debt costs.
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  But they're also very clearly warning about massive external risks.
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  Trade wars, geopolitics, things completely outside their control.
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  Which leaves you, the listener, with a final thought to chew on.
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  We have a fund whose assets, REITs, are inherently sensitive to both debt costs
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  and long-term economic confidence.
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  Managers sees attractive valuations based on stabilizing debt,
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  but simultaneously flags huge risks from geopolitical uncertainties and trade friction.
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  So for the next year, what will be the stronger force? Will the performance
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  be dictated more by that hoped-for stabilization in financial markets,
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  or derailed by the disruptions of global politics and trade wars?
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  It really frames the central tension ahead.