For AIA ILP

Another one I offered to do for another friend. He has an AIA ILP, but I feel that maybe ending it and buying maybe a Whole Life policy (for guaranteed return as well as coverage, maybe from Tokio Marine, because ILP coverage is based on the cash value) might be better.

But since he is gonna do (make sure you do) a POSB Invest Saver or similar program into STI ETF (250/mth at least, I hope.  SRS if you can ;) When your funds are huge enough, make sure CPF SA/RA is at least 10% of total portfolio size).

Suppose he puts money often into the STI ETF, he would look for diversification.

Also, remember to reduce coverage of your insurance to zero by age 45 or latest by age 55

His original portfolio allocation

Suggested Allocation

Assuming

• POSB Invest Saver (STI ETF) : $250 (58%)
• ILP : $180 (42%)

Allocation

• 60% AIA US Equity Fund
• 20% AIA Greater China Equity Fund
• 20% AIA India Equity Fund

Note: This portfolio excludes the Bond(CPF) portion of the portfolio

Why

Management fees and sales charges for all 3 funds are the same (1.5% p.a. and 5% respectively)

AIA US Equity (60% allocation, 25.2% of total portfolio)

• I allocated 60% into AIA US Equity for more stability and consistency (large cap stocks)
• Feeds into PineBridge US Large Cap Research Enhanced Fund
• Morningstar rates 3 Stars (looks average)
• Portfolio looks balanced somehow.
• Expense Ratio:
• AIA management (1.87%)
• Underlying fund from PineBridge (1.33%)
• Turnover Ratio: 216.76% (?!)

AIA Greater China Equity Fund (20% allocation, 8.4% of total portfolio)

• China is a big and growing market, with a long time horizon, much growth is expected.
• Considered the balanced fund but it just chucks in Singapore bonds???
• Feeds into Fidelity Funds - Greater China Fund II.
• Morningstar rates 4 Stars (above average)
• Portfolio has very little defensive stocks though.
• Expense Ratio
• AIA management (1.92%)
• Underlying fund from Fidelity (1.21%)
• Turnover Ratio: 72.79%

AIA India Equity Fund (20% allocation, 8.4% of total portfolio)

• Similar to China, India is a big and growing market, with a long time horizon, much growth is expected.
• Competing fund is the AIA India Opportunities Fund, but has poorer performance. The turnover ratio is much much better though (might be worth looking at it in the long run, 15.58%)
• Feeds into PineBridge India Equity Fund
• Morningstar rates 4 Stars (above average(
• Low emphasis on defensive stocks though
• Volatility is decently high
• Expense Ratio
• AIA management (1.81%)
• Underlying fund from PineBridge (1.31%)
• Turnover Ratio: 51.08% (hopefully it goes back to 23.11%)

If the owner of the policy do not mind more risk for more possible growth, the allocations can be changed to:

• 40% AIA US Equity Fund
• 30% AIA Greater China Equity Fund
• 30% AIA India Equity Fund

Looking for more potential growth, but requires a larger risk appetite

Quite tempting thought, also partly because of the ridiculous turnover ratio of the US Fund.


(Same as the prior post, I simplified it but added links for more info)