ILP Funds

[jamesco]

ok thanks for the replies

 

[sck013]

what can i do to make the most out of my ILP plans? how can i monitor the funds issit earning or not so i can change funds?

This is my own experience so you need to see if it suits you. I do not go for funds that are industry focus, e.g Tech funds, Biotechnology funds. Reason is because all industry goes through up and down and more importantly, I am not proficient in that industry to know when it is going up or down.

So I focus on country funds (e.g. Singapore, China) and region funds (e.g. Asia ex Japan, emerging markets, europe). The % for these funds varies depending where I think it is likely to see strong growth for the next 3 - 5 years. Another guide I use is that if a fund has been performing very well for a particular year, I try to switch re-balance it or switch part of it to other funds (reason is that the probability that a country doing well for consecutive years is low. How much to switch out depends on you).

When a particular area (country or region) is having some financial crisis, i try to switch those funds out or in a more drastic move like the 2008 (global issue), I move the funds to money market funds which is less volatile (to preserve capital). However for the monthly premium, I maintain the original funds % allocation (this is because as the funds are going down in prices, I can buy them cheaper on a monthly basis). When the funds recover, I will reap the rewards, just like China funds after 2008. After the problem is more or less stabilize, I move the funds back from the money market funds to the country / regions funds again.

 

[kuro]

once again, people is using a pot of gold coins vs a handful of gold coins in comparison.

 

[jamesco]

hmm dont quite understand what do u mean by that?

once again, people is using a pot of gold coins vs a handful of gold coins in comparison.

 

[chopra]

Some insurance companies have an online login portal that allows you to see a summary of what UT's you are holding and their values. Also, you can do free fund switching there. Can be done by yourself.

Others do not, but you can check the performance of each fund online. Then, ask your agent to help you make changes if you want.

I believe most insurance companies in Singapore effectively charge a 3% sales charge. Either way, switching should be free of charge.

So for example, Client A may feel that bonds have had a good run in 2012 and like to switch them over to equities. He logs on to his online portal and makes the fund switches. He also redirects all future premiums away from bond funds as he is bullish.

is fund switching really free as what agents pitch????????
either you missed my post or u dun understand bid sell spread.

 

[chopra]

if one is an expert in fund switching, one is perhaps an expert in ETF or purchasing unit trust on yr own. why go thru insurance agents. on the former, it is well known that some if not most funds can't beat etf. lower sale charge.

 

[bloodsucker]

chopra, fund switching is on a bid-to-bid basis. Nothing to do with spread since u do not get a separate charge for switch. Whether or not there are any other hidden charges depend on the companies. I'm not too clear on that. But I'm guessing if the company says free switching, it means that they don't do any further charges.

Agree with your 2nd point though. A person good in fund switch would not be making a very good decision buying an ILP. Single premium, maybe. Regular premium; the fella must be nuts or just trying out his skills see if he can beat the index hahaha

 

[chopra]

chopra, fund switching is on a bid-to-bid basis.

Are you able to back up this statement?
Technically this is impossible. Sell at buy price is okay, but buy at buy price? who absorb the spread cost?

 

[bbmars1128]

Are you able to back up this statement?
Technically this is impossible. Sell at buy price is okay, but buy at buy price? who absorb the spread cost?

NOt sure I can answer your question correctly. My experience, I sell fund A today, UT converted to $$, with $$ buy into whatever you switch into base on bid price since there is no sales charges. The bid and sell price, if you check them I think it is the so call sales charges. In early 2000 or so, I had quite a number of switches (no free switches allowed), I did manula calculation and updated it online in Fundsupermart even before the system updated my account. Fundsupermart has this watchlist where you can enter your UT and keep track of it. I had consolidated my POEMS and FSM UT together here. The values which I had calculated were very closed to the actual.

You see, the difference came about because of the switching in and out. For intra fund, switching within the same FD group happen within the same day. However, for inter-fund switching, lots will depend on how long it takes them to sell and buy for you. To be precise, how long they take to switch out and in.. typically, can be a few days or up to a week. So you are at the mercy of the system doing the switching, good and bad.

That's my experience. So what I nornmally do is sell that UT and use another sum to buy whatever I wanted to switched into since those days, all were charged. Does not make any different (except for intra fund switch which cost 0.5%). However, currently seems like most are giving some form of free switch, so you don't have to pay at all for charges.

 

[bloodsucker]

Are you able to back up this statement?
Technically this is impossible. Sell at buy price is okay, but buy at buy price? who absorb the spread cost?

Yup its true bro. Cos I did it before. I do own a single-premium ilp myself. The company does free switching so I have no idea how it absorbs the charges and all that. Perhaps it deems it a low price enough to absorb the sales charge? Or maybe it has skimmed enough cash off the other fellas to more than cover switching charges lol

Cos u gotta see the stats that the proportion of people who really do fund switches are extremely small. And even so, they usually switch after a very long time when their funds are performing like crap. Very very few, perhaps a handful, do active fund switch on a reguar basis.

 

[chopra]

Bloodsucker and bbmars
ok, could be... selling at midpt and buying at midpt through special means (like thru their prop traders who are entitled to v. v. v. low brokerage commission). ok make sense.
Thanks on that.

 

[bloodsucker]

B(like thru their prop traders who are entitled to v. v. v. low brokerage commission)

Would like to add another point here. For the very large investment institutions, their traders do not pay brokerage commission. Its all free for them. So not only do they not pay zero comm, they get ultra competitive spreads as well. I cannot for sure say how the insurance company does free fund switch, cos I haven't worked for an insurance company's asset management in the buy or sell-side b4. But what I can say is that they are earning heck of alot more than what you or I think.

They pass the costs of spreads and other sales charges to us consumers not cost they rack up the costs, but because that is a valid and legal way to charge us for extra profits. Do you think it's fair that a regular premium ILP charges 5% bid-offer spread, plus management fees and other hidden charges? I don't think so. But most agents do not know how the products work and keep selling such products. They keep pushing the benefits of such plans without first getting into the underlying math of it. Not to blame them though; they are ultimately sales people and not numbers people.

 

[hwmook]

I bet your agent don't tell you the HUGE SPREAD involved. Compare it with stocks and you would see how CARROT ilp can be.


For instance, the bid/sell for Greatlink Asean Growth is S$ 2.563/S$ 2.697. Compare it with a stock, say Singtel $2.31/$2.32. Look at how much fund manager and insurance agents are sucking the commission! Holy...

I don't know where you get the buy/sell price but unit trust only have 1 price which is the NAV, that's its. If you buy unit trusts, you are charged sales charge on top of the NAV. Maybe the prices shown by these insurance coy are not the same as fundsupermart. Fundsupermart have funds which have 0% sales charges, so you only need to pay for the quarterly fees for holding them.

If you want to buy unit trusts, you can do so via fundsupermart/poems/dollardex, i don't know why you need an ILP and let the insurance coy profit from you. Buy term invest rest is always the correct strategy. Investing in bond funds is a good way to make money without the volatility.

 

[bbmars1128]

Frankly, many of these insurance copmpany UT are also available on POEMS and Fundsupermart at <1% sales charges without the insurance coverage part of it.

My past experience with ILP, I was holding on to them for some years before giving up. I went online to check my UT status and even including switching and paying for them (no free switch those days) to minimise LOST. However, a look at almost all the entire list of available funds under the agent company, none gave satisfactory return, some were even worse as I bought into their best funds during those days. Given that the best funds are already doing that bad, how on earth could I switch into. Actually, I did switch into some growth funds hoping market would turn, but it has gotten the same thing much worse now as teh lost included with sales charges.

FYI, Fundsupermart ZERO% sales charges promotion was over. You have to pay more as compared to POEMS now.

 

[hwmook]

Frankly, many of these insurance copmpany UT are also available on POEMS and Fundsupermart at <1% sales charges without the insurance coverage part of it.

My past experience with ILP, I was holding on to them for some years before giving up. I went online to check my UT status and even including switching and paying for them (no free switch those days) to minimise LOST. However, a look at almost all the entire list of available funds under the agent company, none gave satisfactory return, some were even worse as I bought into their best funds during those days. Given that the best funds are already doing that bad, how on earth could I switch into. Actually, I did switch into some growth funds hoping market would turn, but it has gotten the same thing much worse now as teh lost included with sales charges.

FYI, Fundsupermart ZERO% sales charges promotion was over. You have to pay more as compared to POEMS now.

Nope, many bond funds are ALWAYS 0% sales charge. Its mainly equities funds that have sales charge.

 

[bbmars1128]

Nope, many bond funds are ALWAYS 0% sales charge. Its mainly equities funds that have sales charge.

I have never been and are not interested at all in bonds.... Only referring to equities funds using CPF$$. FYI, There numerous equity funds at ZERO charges using CPF under POEMS.

 

[matchy]

i think patience and timing very important

 

[hwmook]

I have never been and are not interested at all in bonds.... Only referring to equities funds using CPF$$. FYI, There numerous equity funds at ZERO charges using CPF under POEMS.

Different people different thinking, i mainly invest in high yield bond funds as i invest in equities myself already. I use CPF to invest too.

 

[bbmars1128]

Different people different thinking, i mainly invest in high yield bond funds as i invest in equities myself already. I use CPF to invest too.

Over the years when I started out, bonds have to pay and not many except using CPF and the returns..... miserably low as compared to equity. Since then, I have never bother to take a 2nd look... Mainly do my Stock investment and some UT. Bulk of CPF $$ still drawing 2.5 and 4% interest from CPF unless it is the start of the bull cycle. Even then, I don't dump everything into the market... need to balance my risk. Can afford some calculated risk.

 

[matchy]

wrong. I managed to cash out for my parents within one year with profit.

buy unit trust need 10years to breakeven???

may i know how much that profit is?