Wednesday, January 23, 2013

S-Reits - Time to take profits?

The increasing demand for yield hunt, in particular the S-Reits has grown even stronger in recent months, leading to further yield compression. As of current price, we have now seen more and more Reits falling below into the <6% category. I remember just a year ago, most S-Reits are easily in the 6% yield category. Now, we can almost only see a few of them. Are we going to see yield or stock price go south first?

I think the euphoria for S-Reits have become very evident. You have lots of new investors asking which Reit is a good buy now or is this Reit still a good buy now. The answer at most times vary. But one thing is that if you are only thinking of entering Reits now at current price, then it'll be a "watch and pick" from here. To me, the risk reward is very unfavorable but that could be me. And I could be severely wrong.

If I have to choose a Reit at today's current environment, I would prefer to pick a more quality Reits rather than Reits with a high yield, with perhaps Ascendas Reits my preferred choice. But otherwise, small and mid cap stocks would more likely be more risk rewarding at the moment.

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