14 Dec 2020
Hi Zhiyang, while the i-Edge S-REIT Leaders Index has 26 REITs, our optimised REIT+ will only have 20 REITs.
This is because we seek to balance between fully replicating the index, i.e. buying all 26 constituent REITs, vis-a-vis building an optimised portfolio using a substantial portion of the index constituents with an eye on the portfolio's tracking error to the benchmark index.
In this instance, we have used an optimised portfolio of 20 REITs with a tracking error of <0.5% p.a. to the Leaders Index. In essence, this strikes a balance between representation, i.e. to minimize tracking error, and trading liquidity, i.e. to minimize trading costs and improve performance for customers.
Hope this clarifies!
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