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Bancassurance
The purpose of this presentation is to enhance investor awareness of
ILP.
INVESTMENT LINKED PRODUCTS
2
Bancassurance
The Need of a Retiree
What are the risks?
1.Death / Disabilities / Critical Illnesses
2.Hospitalization and other routine medical
expense.
3.Large dependency on debt
4.Unavailability of income is disastrous for
families
5.Accumulation of small amounts in large sums
for future needs i.e. saving
What is needed is risk mitigation
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Cost of living is increasing every year!
Petrol price up 5 cents Sugar price up
25 cents / kg
AUGUST
2010
CPI UP 2.1%
Agt AUG
2009
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Comparison between 12-month FD rate against Malaysia’s
Inflation Rate (%)
Sources: Alliance Research
CP
I
FD
Current FD rates are still relatively low (3.20% pa. for 12 months tenure)
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What shape will the recovery take?
V — Relatively swift market recovery
W — Short recovery, followed by second fall
√ — Fall, rise, then level
U — Slow market recovery
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CURRENT ISSUES
PRICES OF HOUSES
MEDIAN PRICE OF TWO TO THREE
STOREY TERRACED HOUSES*
Location 2006 2007 2008 2009 2010 %
Penang 198,000 221,000 253,000 236,500 250,000 26.26
Kuala
Lumpur
340,000
355,000 350,000 342,000 410,000 20.58
Petaling
Jaya
315,000 340,000 350,000 338,000 400,000 26.98
Johor
Bharu
168,050 180,000 195,000 187,000 190,000 13.06
SOURCE : Data for 2010 NATIONAL PROPERTY INFORMATION CENTRE FINANCE MINISTRY
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Life Expectancy
As scientists identify new remedies for life-shortening ailments we can expect to see life expectancy continuing to lengthen year after year. Since 1945 life expectancy of citizens living in the wealthier countries around the world has increased by one year in every five. The American Life Extension Institute believes that average life expectancy in the U.S. will reach 100 by 2029,in just 21 years. Some scientists hold strong views that ageing is a curable disease and that in our own lifetimes it may be curable and life expectancy of even mature adults extend to 500 or even 1,000 years of age 40. Even a fraction of this life expectancy increase challenges any idea that we should retire in our 60’s. But of course there are always pandemics, which we are warned to be alert for, which could wipe out millions of people in a few months. The last major worldwide pandemic was the influenza outbreak of 1918, when around 40 million people died. The other current challenger to an older workforce is obesity, a by-product of our wealthier and more sedentary lifestyles.
MALAYSIA LIFE EXPECTANCY is 75
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New BNM Guidelines in December 2005
Criteria for Investment linked policies.
Ceiling limit of RM 5000.00 (per individual life per insurer)
For premiums that are subject to low premium allocation of 40% to 50%
Any excess of RM 5000,00 will be treated as investment premiums.
SAM test Sum Assured multiple test
Age Band Ratio (at least)
< 35 40
36- 45 30
46-55 20
> 55 10
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Asian opportunities and challenges
OPPORTUNITIES
• Investment industry in its infancy —
funds account for 3-4% of household
assets and deposits dominate
• A continent of savers and not
spenders will ensure an accelerated
growth rate for the next few years
• India and China represent the biggest
opportunities for conversion of
existing
savings pool and future growth
• Emerging aspirational middle class
with increasingly complex investment
needs
• Unit-linked pension and insurance
opportunities
• CHALLENGES
Distribution largely dominated by banks;
distribution practices are typically focused
on ‘selling’ rather than ‘advising’
• Overcoming the Lehmans obstacle
• Trading mentality and short-term outlook
– the challenge of educating investors
• Mutual funds face stiff competition in
more sophisticated markets such as
Singapore and Hong Kong
• in the wake of the global financial crisis
and the Madoff affair, new regulation and
stricter interpretation of guidelines could
restrict offshore activity in some markets
Source:
Sept 2009
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V50, The VIP investment
Which diamonds can you pick for the flexible investments in
V50?
The “hand picked” funds:
For Professional Investors Only
GROWTH
STABLE
BALANCE
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Product Innovation ILP launched
2003 2008
We offer product variation and asset diversification
Proprietary Funds
•Interest rates •Global equities
•Currencies
•Municipal bonds
•Fund of hedge funds
•Volatility (equity)
•Volatility (bond)
FI + Local
equities
PCG 2,
PCG 5
PCG 2,
PCG 5
Fixed
Income
(FI)
FI +
Global/
Foreign
equities
First Global
Leverage Plan,
Global Excel
FI +
AsiaPac
REITs +
Property
stocks
Property
Plus CG
Introduction
to option,
FI + Regional
equities
Far East CG,
ASEQ CG
FI + Multi-
asset
class
(option)
CORE CG,
CUBE CG
FI +
currencies
(option)
G10FX CG
FI + Asian
equity
outperform-
ance (option)
Precious
Asian CG
TCP 1
TCP 3
TCP 2
TCP 4
FI + Gold
EARN
Gold CG
Al-Waqi
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Takaful Investment-linked fund size of RM mil
22
3-year CAGR of 9.4%
Growth 21.1% 34.7% -19.8% 45.2%
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Local Policymaker Set the Direction – Regulated Business BNM addresses basic requirements and customer protection
Fees / Charges
and Expenses Disclosures
Investment
Guidelines on
Investment-
linked Takaful
Business
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Specific Reference to Investment Limits BNM focuses on prudence
Counterparty Limit
• The value of a fund's investments in equity of any single issuer shall not exceed 10% of the fund’s NAV.
• The total value of a fund’s investments in securities, OTC derivatives (other than for the purpose of hedging) and structured products of any single issuer/group of related issuers shall not exceed 25% of the fund’s NAV.
Asset Limit
• The total value of a fund's investments in unlisted securities shall not exceed 10% of the fund’s NAV.
• The total value of a fund’s investments in structured products shall not exceed 15% of the fund’s NAV.
• The total value of a fund’s investments in any collective investment scheme (CIS) shall not exceed 10% of the fund’s NAV.
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Specific Reference to Investment Limits BNM focuses on prudence
Limit on Class of Securities by a Single Issuer
• Notwithstanding paragraphs above, a fund’s investments in any class of securities of any single issuer must not exceed 10% of the total value of that class of security, except for securities issued/guaranteed by the Federal Government of Malaysia and Bank Negara Malaysia.
The total value of a Takaful Operator's investments
in foreign assets shall not exceed 50% of the sum
of all investment-linked funds’ NAV.
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• Portfolio diversification, improve asset allocation.
• NOT meant to replace conventional asset classes.
• Helps to lower overall portfolio risk, volatility.
• Helps to increase overall portfolio return.
• Helps in asset planning via naming of beneficiary.
• Tax advantage – may vary in different jurisdictions.
The Case for Takaful ILP Complements existing portfolio
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Takaful Investment-linked Process Digestion period of min 3 months from concept to launch
Step 1:
Product
Development
Step 2:
Asset Screening
(Quantitative &
Qualitative Analysis)
Step 3:
Internal approval • Product Committee
• Investment Committee
• Shariah Committee
Step 4:
BNM approval • Specific guidelines
Step 5:
Product Launch
Takaful
Investment-linked
Product
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• Investment strategy is decided by the
Takaful provider.
• Profit earned is divided on
Mudharabah basis (profit sharing).
• FLEXIBILITY!
1.Participants have full control over
their investments - Which fund ?
When to invest? When to sell
back?
2.Participants can choose
coverage level.
• Profits earned fully belong to
Participants.
• The Takaful provider charges nominal
fee for selling of units and
management of the fund.
29
What is Takaful Investment-Linked Product? vs. an Ordinary Family Takaful plan
Ordinary Family Takaful Investment-Linked Takaful
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• Single Contribution (Premium) with Principal Protection:
• Low risk.
• Malaysian public prefer 100% capital guarantee.
• May cover less than 100% to further improve potential returns depending on customer profile/risk appetite.
• Capital protection only when held till maturity.
• Potential to enhance return on otherwise low-yielding assets.
• Opportunity to tap into global markets and different asset classes with low initial investment.
• Minimal charges.
• Daily NAV, benchmarking possible = Transparency.
Typical Takaful ILP Feature Low risk investment alternative
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Takaful Protection Wrap
31
Takaful Investment-linked Model Takaful protection + investment strategy
Investment
Strategy Participants’ Account (Investment Structure)
Participants’ Special Account
(Tabarru / Risk charge)
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Single Contribution
Wakalah Fee
Expenses
Profit
Commission
Participants’ Account Participants’
Special Account
(Tabarru)
Fixed Income Equities
Policy duration
Acco
un
t V
alu
e
Protected
curve
Sum at risk
Level death benefit
Policy duration
Acco
un
t V
alu
e
Policy duration
Investment Structure
Takaful Investment-linked Model Product structure
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Evolution of Islamic Investment Strategy Options allows access to greater asset choice, enhance returns
Co
mp
lex
ity / R
an
ge
of A
ss
ets
R
etu
rn
Risk
NOTE: Shariah investments naturally bear less risk by virtue of not invest in conventional finance,
alcohol, tobacco, pornography, armaments and gambling related businesses.
Islamic
Financing
(Bonds)
Direct
Investment
(Unit Trust)
Leveraging
(Option)
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Etiqa has launched five Single Contribution Takaful ILP ... and their performance to-date
* The investment structure of the funds above aims to at least refund the initial contribution at maturity with minimal risk.
Fund Performance Summary (Jul-10)
Fund
Name
Date
Launched
NAV
(RM) Risk Rating Asset Allocation 1Y 3Y
Ave. Ann. Return
since inception
Total Return
since inception
TCP 1 May-05 106.10 Low Risk Global Equity (matured ) 2.17% 10.9%
TCP 2 Apr-06 109.30 Low Risk Global Equity 0.73% 1.56% 2.47% 10.7%
TCP 3 Nov-06 102.20 Low Risk Global Equity 2.42% 3.83% 2.02% 7.41%
TCP 4 Feb-08 99.60 Low Risk Global Equity 3.37% n.a. 2.40% 5.99%
Al-Waqi Aug-08 98.30 Low Risk Global Equity 2.73% n.a. 1.79% 3.57%
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Case Study 1: Takaful Capital Protection (TCP) Plan Takaful ILP with investment into Global Equities
Product Feature
Tenure 5 years
Guaranteed Death Benefits* 25% of the single contribution or up to RM 10,000
(Double Indemnity for accidental death)
Minimum Amount RM 15,000
Maximum Amount RM 5 mil
Eligibility 18 – 70 years old (next birthday)
Wakalah Fee 1-1.5% p.a.
Tabarru • Monthly Tabarru’ amount for Takaful cover depending on age and sum at risk.
• The Tabarru’ amount will be credited in PSA fund from which the benefits are paid.
Hassle Free Application
Automatic approval
• All proposals will be accepted
• No health questions
• No underwriting
• No loading
* This Takaful plan does not cover any pre-existing medical and health impairment, which existed 12 months prior to the plan
application date.
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Investment Strategy Minimise risk, maximise potential return
Fixed Income
Equity
Syariah-compliant Bonds or
Money Market Instruments e.g.
Negotiable Islamic Deposits (NID)
Islamic Global Index
At least 70%
Up to 30%
Asset Class Securities Exposure
Local
Foreign
100% Capital
Protection at
maturity
Potential Upside
Purpose
Capital
Protection
at maturity
Potential
Upside
Local
Fixed
income
Global
Equity
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Case Study 2: Takaful Al-Waqi Plan Takaful ILP with investment into Commodities
Product Feature
Tenure 2 years
Guaranteed Death Benefits* 25% of the Single Contribution or up to RM 10,000
(Double Indemnity for accidental death)
Minimum Amount RM 20,000
Maximum Amount Unlimited
Eligibility 18 – 70 years old (next birthday)
Bid-Offer Spread
(Initial Charge) 2% of Single Contribution
Wakalah Fee 0.5% p.a.
Tabarru • Monthly Tabarru’ amount for Takaful cover depending on age and sum at risk.
• The Tabarru’ amount will be credited in PSA fund from which the benefits are paid.
Hassle Free Application
Automatic approval
• All proposals will be accepted
• No health questions
• No underwriting
• No loading
* This Takaful plan does not cover any pre-existing medical and health impairment, which existed 12 months prior to the plan
application date.
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Wakalah
• Wakalah is a contract whereby one party nominates another (as ‘Wakil’) to act on his/her behalf.
• In the context of a Investment-linked Takaful product, the participant nominates Etiqa Takaful Berhad to manage the Takaful Fund on their behalf.
• Participants will be charged an Annual Wakalah Fee, akin to Annual Management Fee in conventional insurance, of the total Fund Value.
Tabarru
• Participants will contribute (Tabarru’) a fixed amount of the initial capital/contribution, upfront, and placed in the Participants’ Special Account. It is akin to the risk charge in conventional insurance, where in this case it is for the Takaful cover e.g. 0.275% of the Single Contribution.
Wakalah and Tabarru’ (Annual Management Fee and Risk Charge)
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Keeping Up with Conventional Finance Shariah capital market is still far behind its conventional counterpart
• Investment strategies which aim to deliver absolute return or the quest of positive return under all market condition have risen in popularity and appeal.
• Nonetheless, there is limited supply of such Takaful offering.
• As a result, the increasing demand still depends largely on conventional strategies.
• The universe of Islamic financial instruments is very limited. Plenty of work needs to be done to engineer new Islamic instruments to satisfy the diverse risk/return needs and profiles of Islamic investors.
• The possibilities seems to be virtually limitless in the world of Islamic finance.
Bancassurance
VIP 50 PLAN
A packaged plan of Guaranteed
Savings (VIP 50 PCI) plus Flexible
Investment (VIP 50 INVEST) for
potential upside – all in one great
plan.
Bancassurance
How does VIP 50 Plan work ?
(50%)
VIP 50 INVEST
- Flexible Investment to suit your life style
- Choice of 3 investment funds:
Stable, Balanced & Growth
- Excellent track record of fund performance
- Long term insurance coverage up to age 85 years old
(50%)
VIP 50 PCI
- Guaranteed Annual Cash payout of 3.80%. Total 19.0% Guaranteed Cash Payout over 5 Years
- 100% Capital Guarantee at maturity
- Insurance protection up to 125% of Single Premium for 5 years
- No market risks
VIP 50 PLAN
(100%)
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What is the Unique Value Proposition of VIP 50? Capitalize on 1Malaysia positive outlook
44
• POSITIVE economic GROWTH of Malaysia @ 6% p.a.* for next 5 years.
• 100% of funds shall be invested in MALAYSIA.
• FLEXIBLE investment structure to suit customers’ risk appetite – everybody can participate.
• GUARANTEED SAVINGS and ANNUAL CASH PAYOUT elements.
• PROTECTION up to 125% of SINGLE PREMIUM in case of unexpected circumstances.
*10th Malaysia Plan
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Single Premium Open-Ended Investment-linked Plan
Provide Protection and investment Benefits
Maturity following Life Insured’s age of 85 (Age Next
Birthday) at Policy Anniversary date
NO Capital Guaranteed
NO Annual Cash Payout
What is VIP 50 - Invest
Bancassurance
100% CAPITAL GUARANTEED when held till maturity
GUARANTEED 3.80% Annual Cash Payouts for 5 years
Absolutely NO Market Risk
Insurance Coverage at No Additional Costs
Tax-Relief On Annual Cash Payouts & Maturity Value
Speedy Benefit Distribution
Why VIP 50 PCI
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This plan is suitable for those who want to :
Diversify the returns on their savings
Contribute towards their retirement plan
Be assured of their investment returns in advance
Save and receive a regular stream of income
Who should buy a VIP 50 PCI?
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Sample Calculation of Returns
48
Based on the historical performance mentioned in the product brochure. Annualised returns are net of fund related expenses and tax.
Past performance is not a guarantee, representation or indication of future performance.
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Sample Calculation of Returns
49
Based on the historical performance mentioned in the product brochure. Annualised returns are net of fund related expenses and tax.
Past performance is not a guarantee, representation or indication of future performance.
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4. -
To create public awareness of VIP 50
50
Exclusive gifts for customers – 4 GB diamond
thumbdrive
RETURN
PROTECTION
What are the main 4 features of VIP 50 to remember?
VIP 50, Investment
Flexible investment
Guaranteed Savings
Protection up to 125%
Protection up to 85 years
VIP 50 PCI
VIP 50 INVEST
VIP 50, Investment
guaranteed savings & flexible investment
VIP 50 PCI VIP 50 Invest
•Capital guaranteed at maturity
•Fixed yearly cash payout
• Additional potential higher returns
• Investments to match your profile
What are the highlights on RETURN?
VIP 50, Investment
VIP 50 PCI VIP 50 Invest
Insurance protection up to 125% for 5 years
Insurance coverage up to the age of 85 years
High Protection & Long term Protection
What are the highlights on PROTECTION?
• Guaranteed 3.8% per year
• Total 19% guaranteed cash Payout over 5 years
• 100% capital guarantee at maturity
• Insurance protection up to 125% for 5 years
VIP 50 PCI
• 3 choices of investment funds:
Stable, Balanced, Growth
• Excellent track record
• Long term insurance coverage up to age of 85 years old.
VIP 50 Invest
How are these 4 ingredients combined?
guaranteed & high flexible & long
VIP 50, Investment
VIP 50, Investment
What can I choose?
No need to choose:
100 % capital guarantee at maturity.
3.8 % fixed pay out per year.
Freedom to : Choose the investment that best
fit your profile.
Decide on your preferred target return
Check how much risk your willing to take
VIP 50 PCI VIP 50 Invest
What is my profile?
Growth
Stable
Balance
“The more risk your willing to take, the higher the potential returns “
VIP 50 Invest
VIP 50, Investment
VIP 50, Investment
Stable Fund
Which Fund fits my profile?
• This fund is most suitable for conservative investors. • The fund invests primarily in low risk investments.
Balanced Fund
•This fund is suitable for investors with a moderate risk profile.
•The funds investments are balanced over bonds and equities.
Growth Fund
•The fund’s top priority is capital growth. •The fund is suitable for investors who are seeking higher return.
• The fund is suitable for investors who are willing to stand the volatility of the equity market.
, You can switch; • Two times per year
for FREE. • After that, at the
flat rate of 25 RM per switch.
VIP 50, Investment
Stable Fund
Can I switch, should I switch??
Balanced Fund
Growth Fund
, normally there is no need to switch: • You’ve selected the fund that matches your
profile, the fund managers will react on economical changes within the funds.
• But if your profile changes, you may want to switch between funds.
VIP 50, Investment
Stable Fund
How is the NAV calculated if I switch?
Balanced Fund
Growth Fund
Sample calculation:
Switch from Fund A: • Last NAV x Unit balance e.g. RM 1.500 x 16,000 units =RM24,000 (Fund Value)
Switch to Fund B: • Fund Value / Last NAV e.g. RM24,000 / RM 1.300 = 18,461 units
VIP 50, Investment
STABLE
Fund Objective:
Investment Style
To Provide higher return than FD.
Capital preservation.
Money Market mainly.
High Quality Bonds.
Low risk =
Stable Returns
Stable Fund
Which Fund fits my profile?
VIP 50, Investment
Fund Objective:
Investment Style
Mix of Safety, income and capital appreciation
Moderate to fast returns above FI
Combination of Fixed Income and Equity Instruments
Medium Risk =
Balanced Returns
Balanced Fund
Which Fund fits my profile?
VIP 50, Investment
Fund Objective:
Investment Style
Capital appreciation
Invests in primarily in equities that show high potential for growth
Investing 85% into Equity and the remaining into FI and MM
Higher Risk =
High Returns
Growth Fund
Which Fund fits my profile?
EXCELLENT PERFORMANCE!
VIP 50, Investment
1mth CYTD 1 year 3 years 5 year Since
inception
Annualized Since
inception
Stable 0.78 % 1.73 % 4.85 % 10.10% 28.42 % 29.70% 4.63%
Balance 2.12 % 5.97 % 14.95 % 7.57 % 46.42 % 49.20% 7.21 %
Growth 2.62 % 8.09 % 21.34 % 8.52 % 63.97% 64.30% 9.02 %
July 2010,Source MIM * Annualized returns are net of fund related expenses and tax.
How did the fund performed over the last 5 years?
Stable Fund
Balanced Fund
Growth Fund
Past performance is not a guarantee, representation or indication of future performance.
Where does the outperformance come from?
There or two main sources of additional return in the funds. 1. Asset Allocation 2. Bond/Stock selection
The Asset Allocation decision is the decision how much to invest in which asset class. In these funds there are three asset classes: Money Market, Fixed Income, Equities
The Bond/Stock Selection is the decision in which specific Money Market Instrument, Bond or Stock to invest.
1st source of return
2nd source of return
VIP 50, Investment
Top-Down Approach
What is Asset Allocation?
The Fund Manager allocates the funds between the three Asset Classes based on the economic outlook on short- to medium-term.
The Manager will shift to lower risk assets in times of uncertainty and will allocate more to riskier assets when the outlook is
positive.
The Asset Allocation is monitored at all times and will depend on the strategic allocation in the three funds.
1st source of return
VIP 50, Investment
What is the Asset Allocation in my Fund?
• The three funds have three different risk/return profiles
• Every fund has a different allocation over the asset classes depending on the risk/return profile.
• For every asset class there is a strategic weight for every asset class.
• The STRATEGIC WEIGHT is allocation in a neutral situation (the fund manager is has no preference for one of the asset classes.
• Depending on the economic outlook the fund manager can decide to invest more or less into specific asset classes.
• The funds are always in line with their profile, therefore there is a minimum and maximum weight for every asset class in every fund.
VIP 50, Investment
VIP 50, Investment
30%
60%
10%
Cash & FD
Fixed Income
Equities
5%
55%
40%
3%
12%
85%
Strategic mix Stable Balance Growth
Cash & FD 30% 5% 3%
Fixed Income 60% 55% 12%
Equities 10% 40% 85%
1st source of return
Strategic Asset Allocation
Stable Fund
Balanced Fund
Growth Fund
Stable Balanced Growth
What is the Asset Allocation in my Fund?
VIP 50, Investment
100%
Equity
FI
MM
Min. Strategic Mix Max.
15% 30% 55%
Min. Strategic Mix Max.
40% 60% 70%
Min. Strategic Mix Max.
0% 10% 15% Equity
Fixed Income
Money Market
Structured for capital Preservation.
Stable Fund
What is the Asset Allocation in my Fund?
VIP 50, Investment
100%
Equity
FI
MM
Min. Strategic Mix Max.
0% 5% 40 %
Min. Strategic Mix Max.
25% 55% 60%
Min. Strategic Mix Max.
15% 40% 50% Equity
Fixed Income
Money Market
Balanced Fund
To provide a balanced mixture of safety, income, and capital appreciation.
What is the Asset Allocation in my Fund?
VIP 50, Investment
100%
Equity
FI
MM
Min. Strategic Mix Max.
0% 3% 30%
Min. Strategic Mix Max.
0% 12% 40%
Min. Strategic Mix Max.
40% 85% 95% Equity
Fixed Income
Money Market
To seek capital appreciation over time.
Growth Fund
What is the Asset Allocation in my Fund?
VIP 50, Investment
• Bottom Up Approach
•The assets are invested by the respective specialist managers;
The Money Market Manager invests in cash & FD. The Fixed Income Manager selects quality bonds. The Equity Manager selects good stocks.
•Managers select the individual bonds/stocks to optimize the risk adjusted return within their portfolios.
2nd source of return
What is Bond/Stock Selection?
Is this a good time to invest ?
• The answer to this question lies in how comfortable you are with the Malaysian equity market and therewith the Malaysian economy.
• Some supporting
numbers: • The IMF raised
their expectations for GDP in Malaysia
• 10th Malaysia plan targets 6% GDP growth for the next 5 years
• Analyst expect on average a rise of the KLCI in 2011
VIP 50, Investment
Why now in Malaysia?
VIP 50, Investment
• IMF raised the 2010 GDP growth expectations for Malaysia to
• IMF expectations for GDP growth in Malaysia for 2011
IMF Forecast 2009 2010E 2011E
Malaysia -1.7% 6.7% 5.3%
Why now in Malaysia?
VIP 50, Investment
• Raised the GDP target to 6.0% in the next coming 5 years.
Ministry of finance ( 10th Malaysia Plan)
• In the 9th Malaysia plan only 4% was targeted.
“BNM’s rate hikes in 2010 signals confidence in the Malaysian Economy “
Can the KLCI go up any further?
• If we look at the brokers projections for the KLCI on average they expect the KLCI to close this year at 1461, the same projection for 2011 stands at 1580, which is a growth of 8.1% from 1461.
We don’t have a Chrystal ball, but what do the analysts say?
Broker KLCI target
2010 2011
UOB Kay Hian n.a. 1580
Maybank IB 1455 n.a.
KaF 1550 n.a.
RHB 1450 1640
CIMB 1450 1520
Hwang DBS 1500 n.a.
AMMB 1380 n.a.
OSK 1465 1580
BNP Paribas 1500 n.a.
Citigroup 1400 n.a.
CLSA 1460 n.a.
Average 1461 1580
Source; Selected brokers
VIP 50, Investment
What about the “double dip” scenario?
Is the US
going for a
second dip?
• Investing is never without risk. • There are always insecurities in the market.
• Today's wondering is “is there going to be a second dip on the global market?”
• This question cannot be answered by Yes or No, but there a few things to remember:
The global recovery after the financial crises is led by Asia! Not by Europe or the US.
The prospects for the Asian Economy are VERY POSITIVE.
The funds invests 100% in Malaysia.
VIP 50, Investment
When investing via funds, the Unit Price does not matter. No matter how high or low the Unit Price, the same amount will be invested in the market. What does matters is the market outlook of the market to invest in!
Is the Unit Price too high?
Question:
You have RM 10 to invest and you have two choices: 1. Buy 10 units of 1 RM each, or 2. Buy 5 units of 2 RM each
Which of the two is the smarter buy?
Answer:
It does not make any difference! in the end you still have 10 RM to invest either way. Suppose the market goes up by 10 %, your investment will grow to 11 RM. No difference if you hold 10 units of 1.1 RM or 5 units of 2.2 RM.
Does size matter?
VIP 50, Investment
What if BNM decides to raise the OPR?
“BNM’s rate hikes signals confidence in the Malaysian Economy “
• The market expects a rate hike either end of this year or early next year.
• First of all that shows BNM’s confidence in the Malaysian economy.
• A rate hike doesn’t necessarily mean that product like VIP 50 PCI can offer better fixed returns.
• We have seen the opposite in 2010; while BNM raised the OPR, market yields came down.
• Supply and demand for Fixed Income Instruments determined the market yields.
VIP 50, Investment
How strong is MIM?
MIM is one of the largest Asset Management companies in
Malaysia. Consistently in the top 3 position.
MIM manages the largest fixed income portfolio in the
industry.
MIM manages the largest Takaful portfolio in Malaysia
But I had products managed by MIM before that didn’t deliver any return! • These were structured products, where the manager has little or no influence
on the performance. • The three offered funds in VIP 50 Invest are ACTIVELY MANAGED funds. To
really look at the quality of the fund manager we should look at the long-term performance on these funds.
• The annualized performance since October 2004:
July 2010,Source MIM
Stable Fund
Balanced Fund
Growth Fund
4.63 % 7.21 % 9.02 %
VIP 50, Investment
Initial Charge
5% of the single/ Top-up Premium Commission
2.5% (this commission is part of the initial charge)
Management fee
Stable = 1.00% p.a. Balanced = 1.25% p.a. Growth = 1.50% p.a. * In line with BNM guideline
What are the fees ?
VIP 50, Investment
The initial fee is lower than what most unit trust funds charge, which ranges between 6% and 7%. The initial fee applies on VIP 50 Invest only hence the effective fee for VIP 50 is 2.50%. The initial fee is also in line with the latest BNM guideline, which specified that fee must be taken upfront instead of taken during partial withdrawal or surrender, which was the practice previously.
Is the Initial Fee high?
VIP 50, Investment
• All investments have a certain level of risk.
• In the three funds there are three levels of risk linked to the target return to match the customer’s profile:
What are the risks of the investment part?
“Risk and opportunity are just different sides of the same coin“
• The fund that allocates the most to low risk assets i.e.
money market like Stable Fund has the lowest risk.
• With its mixture of Fixed income and equity, the Balanced Fund carries moderate risk.
• With the highest portion allocated to equity. The risk of the Growth Fund is the highest.
VIP 50, Investment
June 2010,Source MIM All numbers are based on NAV development and are after fees and costs of the fund.
VIP 50, Investment
V50, The VIP investment
How is the performance of the fund?
Stable outperformance compared to the benchmark
Outperforming in “good” and “bad” times!
VIP 50, Investment
V50, The VIP investment
How is the performance of the fund?
June 2010,Source MIM All numbers are based on NAV development and are after fees and costs of the fund.
VIP 50, Investment
V50, The VIP investment
Cautious during crisis, accelerating during recovery
How is the performance of the fund?
June 2010,Source MIM All numbers are based on NAV development and are after fees and costs of the fund.
This document has been prepared solely for informational purposes and does not constitute 1) an offer to buy or sell or a solicitation of an offer to buy or sell any security or financial instrument mentioned in this document or 2) any investment advice. Any decision to invest in the securities described herein should be made after reviewing the most recent version of the prospectus/info memo. Moreover, prospective investors should conduct such investigations as the investor deems necessary and should seek their own legal, accounting and tax advice in order to make an independent determination of the suitability and consequences of an investment in the securities. The opinions contained herein are subject to change without notice.
Investors should ensure themselves that they read the last available version of this document.
Past performance or achievements are not indicative of current or future performance. The performance data do not take account of the commissions and costs incurred on the issue and redemption of units.
Please read…
VIP 50, Investment
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-BRUCE LEE