4 Eye-Opening Truths Hidden in a REIT ETF’s Annual Report
Introduction
Many of us invest in Exchange-Traded Funds (ETFs) for their simplicity and diversification. We buy in, check the performance periodically, and trust that everything is running smoothly under the hood. But have you ever actually lifted the hood and looked at the engine? The annual financial report—often dozens of pages of dense tables and financial jargon—is that engine.
Recently, I did just that. I analyzed the annual report for the Amova-StraitsTrading Asia ex Japan REIT Index ETF, and what I found was genuinely surprising. The details buried in the numbers challenge some of the most common assumptions we make about our investments. Here are the four most impactful discoveries.
Even Five Years Wasn’t Long Enough for a Positive Return
We often hear that holding an investment for the long term—five, ten, or more years—smooths out market volatility and almost certainly leads to positive returns. The data in this report provides a powerful counterpoint.
According to the ETF’s own performance summary, the fund delivered negative annualized returns over both three-year and five-year periods as of June 30, 2025.
- 3-Year Return: -3.24%
- 5-Year Return: -1.36%
This is a significant finding. It demonstrates that even a diversified, index-tracking investment can experience prolonged periods of negative performance. It’s a real-world reminder of the disclaimer printed in every financial document: “Past performance is not indicative of future performance.”
This ‘Asia’ Fund is Actually a 68% Bet on Singapore
An investor buying the “Asia ex Japan REIT Index ETF” would reasonably expect broad exposure to a variety of real estate markets across the continent. However, the portfolio statement reveals a surprising geographic concentration.
The fund’s assets are overwhelmingly weighted towards a single country:
- Singapore: 67.91%
- Hong Kong SAR: 13.31%
- India: 7.91%
- All other countries (Malaysia, South Korea, Philippines, Thailand, Indonesia): Less than 6% each.
This means the fund’s performance is not a reflection of the broader Asian real estate market, but is instead heavily dependent on the health of Singapore’s property sector. For an investor seeking true regional diversification, this is a critical detail that isn’t apparent from the fund’s name alone.
The Hidden 0.18% Yield from Securities Lending
Deep within the report is a detail about a common but often overlooked fund management practice: securities lending. In simple terms, the ETF lends out a portion of its holdings (in this case, REIT units) to other financial institutions, like hedge funds or investment banks, in exchange for a fee. This generates a small, steady stream of extra income for the fund and its unitholders.
The scale of this activity is clearly laid out:
- Value of securities lent out: S$37,779,943 as of June 30, 2025.
- Income earned from lending: S$67,849 for the financial year.
While S$67,849 is a significant sum, it represents a yield of just 0.18% on the assets lent out. This illustrates the low-risk, low-return nature of this side-hustle. It’s a fascinating look at how assets are put to work behind the scenes to squeeze incremental value out of the portfolio for the benefit of investors.
How a $35 Million Loss Became a $41 Million Gain
Nothing illustrates the dramatic nature of market volatility quite like the “Statement of Total Return.” This table shows the fund’s bottom-line performance, and the contrast between the 2024 and 2025 financial years is staggering.
- 2024: A deficit of S$(34,818,334)
- 2025: A return of S$40,879,291
This represents a total swing of nearly S$76 million in just twelve months. This massive swing wasn’t due to changes in the dividends the fund collected, which stayed consistent at around S$17 million. It was driven entirely by the fluctuating market value of its underlying holdings—a powerful reminder that paper gains and losses, not just cash flow, dictate an ETF’s performance from one year to the next. It underscores that even an investment in something as tangible as real estate is subject to massive financial shifts.
Conclusion
Financial reports may seem intimidating, but they are far from boring. They contain compelling stories and critical insights that can redefine your understanding of an investment. By looking past the ticker symbol and the fund name, you can discover the true nature of where your money is, how it’s being put to work, and the real risks involved.
What hidden truths might be waiting inside your own investment statements?
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