Understanding REIT Index ETFs: How to Use a Basket Approach to Capture Yield Opportunities in the Asia-Pacific Region?

For many investors, 'buying property for rental income' is a classic path to financial freedom. However, direct property investment often requires hundreds of thousands of dollars in capital, involves cumbersome property management, and carries the risk of being exposed to a single market, which can deter individual investors.

The emergence of Real Estate Investment Trusts (REITs) has broken this deadlock. Meanwhile, REIT index ETFs take the convenience of this investment tool to the extreme. $Samsung S&P High Dividend APAC ex NZ REITs ETF (03187.HK)$ This ETF is the first real estate trust ETF in Hong Kong, helping investors participate in income opportunities from high-quality properties in the Asia-Pacific region with low barriers to entry and high efficiency.

What is a REIT? From 'buying your own property' to 'collective rental income'

The birth of REITs stems from a simple idea: allowing ordinary investors to participate in large-scale commercial real estate investments.

Suppose you want to invest in a Grade-A office building worth 1 billion Hong Kong dollars; personal funds would obviously be insufficient. But if this office building were divided into 10,000 units, each worth 100,000 Hong Kong dollars, and a company were established to specifically hold and manage this property, mandatorily distributing over 90% of its annual rental income to these 'shareholders'—this company would be a REIT.

Core characteristics of REITs:

Mandatory high dividend payoutAccording to the regulations of the Hong Kong Securities and Futures Commission, Real Estate Investment Trusts (REITs) must have a dividend payout ratio of at least 90%, meaning they are required to distribute 90% of their earnings to shareholders, making them a typical 'income-generating instrument'.

Professional Management: Handled by a professional team responsible for property management, rentals, and asset enhancement, allowing investors to avoid the hassle of 'rental matters'

High Liquidity: REITs are listed on exchanges and can be traded as conveniently as stocks, avoiding the lengthy processes and high transaction costs associated with direct property transactions

High Transparency: REITs must regularly disclose financial reports, property valuations, and rental income, enabling investors to clearly understand the asset status

What is a REIT Index ETF? The Evolution of Diversification

If a REIT is described as 'a basket of properties,' thenREIT Index ETFis 'a basket of REITs'.

Simply put, a REIT index ETF tracks an index composed of multiple REITs, allowing investors to hold dozens of REITs from different countries and property types through a single trade.

Advantages of REIT Index ETFs:

Instant Diversification: A single transaction covers various property types such as office buildings, shopping malls, logistics warehouses, and hotels, while spanning different countries and regions.

Low Cost: Compared to buying individual REITs, ETFs offer advantages in terms of trading costs and management fees.

Automatic Optimization: The index regularly adjusts its components, removing REITs with weakened performance or reduced dividends and including qualified newcomers, ensuring the portfolio maintains its quality automatically.

High Transparency: Holdings are disclosed daily, allowing investors to always know which properties their funds are invested in.

Stable cash flow: Similar to directly holding REITs, ETFs generally distribute dividends regularly (3187 HK distributes dividends in March, June, September, and December each year), providing predictable cash flow.

Samsung Asia Pacific High Dividend Real Estate Investment Trust ETF (3187 HK): A basket of top rental income generators in the Asia-Pacific region.

$Samsung S&P High Dividend APAC ex NZ REITs ETF (03187.HK)$ Tracks the 'S&P High Yield Asia Pacific (excluding New Zealand) REIT Select Index.' This is not a simple broad market index but an 'optimized screened' portfolio.

Index construction logic:

1. Screening pool: Selected from listed REITs in developed markets such as Australia, Japan, Singapore, and Hong Kong

2. High dividend requirement: Picks REITs with the highest dividend yield over the past 12 months

3. Liquidity assurance: Only include REITs with active trading and sufficient market depth

4. Regular adjustments: Review constituent stocks every six months to ensure the portfolio maintains its 'high yield' characteristics

What type of investors are REIT index ETFs suitable for?

REIT index ETFs are not tools for pursuing 'overnight riches,' but rathera 'stabilizer' and 'source of cash flow' in asset allocation. They are particularly suited for the following types of investors:

Retirees seeking stable cash flow: Quarterly dividends provide predictable passive income

Investors looking to diversify their portfoliosREITs have a lower correlation with stocks and bonds, helping to balance portfolio volatility

Investors optimistic about economic growth in the Asia-Pacific region but unwilling to invest directly in real estateBy holding REITs, investors can share in the appreciation opportunities of commercial real estate

The 'lazy' rent-collecting groupThose who don’t want to deal with troublesome tenants, repairs, rates, etc., but still want to enjoy rental income benefits

Making rent collection simpler and smarter

Real estate investment should never be an either-or choice. The threshold for buying properties directly for rental income is too high, and choosing individual REITs carries the risk of making the wrong choice. REIT index ETFs fill this gap perfectly

$Samsung S&P High Dividend APAC ex NZ REITs ETF (03187.HK)$ It offers a transparent, diversified, low-cost way for investors to receive regular cash flow like rental income while participating in property value growth driven by economic expansion in the Asia-Pacific region

Data source: Samsung Asset Management (Hong Kong) Limited, as of February 27, 2026

Disclaimer and Important Notice

• Investment involves risks; past performance is not indicative of future results. Fund prices can go up as well as down, and investors may suffer all or significant losses. Investors should not make any investment decisions based solely on this material.

• The Samsung Asia Pacific High Dividend REIT (excluding New Zealand) ETF is a sub-fund of Samsung ETF Trust II. Its investment objective is to provide investment performance that closely tracks the S&P High Yield Asia Pacific ex-New Zealand REIT Select Index ("Index") before fees and expenses.

• The main risk factors faced by the Samsung Asia Pacific High Dividend REIT (excluding New Zealand) ETF include general investment risks; currency risks; concentration risks in the Asia-Pacific real estate market; risks associated with investing in real estate funds (including real estate market risks, operational and management risks, interest rate risks, liquidity risks, regulatory risks, leverage risks, etc.); Asia-Pacific market risks; securities lending transaction risks; new index risks; multi-counter risks; other currency distribution risks; risks of distributions from capital or effectively from capital; passive investment risks; tracking error risks; trading risks; risks of trading differences; termination risks; reliance on market makers and liquidity risks, among others. Please note that the above list of investment risks is not exhaustive. Investors should carefully read the product prospectus, product key facts statement, and related sales documents before making any investment decisions to fully understand details such as product features, risk factors, and distribution policies.

• The above fund has been recognized by the Hong Kong Securities and Futures Commission (SFC). Recognition does not imply official endorsement of the product. This material is for reference only and does not constitute an offer or solicitation to any person to buy, sell, or adopt any investment strategy.

• The manager may, at their discretion, make cash distributions to unit holders from capital or gross income (while charging all or part of the product’s fees and expenses to the capital or paying them out of the product's capital), thereby increasing distributable income for making distributions, which effectively constitutes a return of capital.

• Distributions paid or effectively paid out of capital equate to investors receiving a return of part of their original investment or withdrawing part of their initial investment or capital gains attributable to that original investment. Any practice involving distributions paid out of the product's capital or effectively out of the product’s capital may result in an immediate reduction in the net asset value per unit.

• This document has been prepared by Samsung Asset Management (Hong Kong) Limited (SAMHK) and has not been reviewed by the SFC or any other regulatory authority. Investors should determine whether any investment product or strategy is suitable based on their personal financial situation, investment experience, and objectives. If you have any questions regarding the relevant information, you should seek advice from professional advisors as needed.

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