Suggestion of Funds for an ILP

One of my friends recently took up an ILP instead of a Whole Life and decided to keep it, so I thought why not I provide information to make the best of it.

After much consideration, I decided on 2 funds.

• Golden Singapore Growth Fund
• Manulife Income Series - Singapore Fund

Allocation: 60% : 40% (if you want, 70% could work as well, but is slightly more risky, but looking at more growth/capital appreciation)

70% could work instead of 60% as well. You'll end up with 10% Golden SG Growth Funds and Manulife Income SG Fund.

End result, focusing on cashflow than growth

Would be nice if there's an immediate fund switch or latest by 3 years.

Looking to increase weightage of Manulife Income Series gradually, maybe starting from age 40, maybe increasing allocation by 10% every 5 years (as well as rebalancing to ensure the funds percentages are balanced to the allocations) until there's 100% in the Manulife Income Series - Singapore Fund.

Idea: Stream of cash, ideally, as time increases, put more money into a passive income stream instead of growth, as you want to reduce risk and focus more on cashflow as you age.

Ideally by age 45 or latest by age 55, the insurance portion should be reduced to zero (due to very expensive insurance premiums, which reduces cash value drastically, which reduces your coverage. At that age and above, the number of dependents should be none, so let the investments pay for your future fees and living expenses) and instead relying on the dividend payout (helps with living expenses), ideally to complement CPF LIFE Annuity program in retirement (complementing Medisave topup for medical and/or SA cash topup/OA to SA transfers after done paying for the house, as described here).

Why:

Singapore has a robust economy and currency. There's less currency risk as the funds are also in SGD.

Purpose:

• Golden Singapore Growth Fund
• Increasing value of the ILP via growth in the earlier years to maximise the return of the Income series fund in the later years (3% of $1000 and 3% of $5000 is different =) )
• Manulife Income Series - Singapore Fund
• Provide cash for living expenses in the years to come

Quick Peek at the "Golden Singapore Growth Fund"

• Management Fee: 1.65% (CPF approved fund means the fees are still okay, not too expensive)
• Sales Charge: 5%
• Feeds into Schroder Singapore Trust Class M (4 star fund in Morningstar Ratings), looks quite alright. (if you don't mind 100% allocation, this fund actually looks very decent, more solid than Manulife Income Fund, but could be due to lack of information)
• Performance seems decent without being very risky, annualised ~6% compounded before fees.

Quick Peek at the "Manulife Income Series - Singapore Fund"

• Management Fee: 1.2% (CPF approved fund means the fees are still okay, not too expensive, the slightly lower management fee should help in the long run)
• Sales Charge: 5% 
• Directly managed by Manulife (40% Manulife Singapore Equity and 60% Manulife Singapore Bond, not much Morningstar data)
• The fund strategy sounds solid, the fund should keep pace with inflation. Though the equities and bonds are sorta blurred by corporate bonds, warrants, REITS, etc. Time will tell.
• Performance seems decent (returns close to the Golden Singapore Growth Fund, assuming dividends reinvested), annualised ~4% compounded before fees.
• Dividend yield is ~3.4% per annum

Hope it helps!

(For simplicity, I have removed many ratios&figures and included links on where to find them)