AIA Singapore is looking to replace underperforming managers and further bolster its investment-linked product (ILP) platform as it awaits approval for its Reit fund under the city-state's Central Provident Fund (CPF) investment scheme.
In April the insurer became one of two anchor distributors for a Singapore Reit-based global property income fund managed by Henderson Global Investors.
However, the fund – the business's 27th investment-linked product in Singapore and its first new product for six years – has disappointed in terms of fundraising, having gleaned just $3 million.
“We are exploring ways to raise more AUM for this fund, given the appeal of yield-focused products,” says Gabriel Tay, AIA’s head of product development, funds and ILPs in Singapore.
It is understood that approval for the fund to join the CPF product pool – where it is eligible to attract pension fund money – is pending. For that it has to go through an evaluation process by fund consultancy Morningstar and the CPF Board.
AIA Singapore’s investment-linked product business has about $6 billion in assets; 20 of its 27 funds are already CPF-approved and account for the bulk of its AUM.
Asked if it has further product launches planned, Tay replies: “We do, but we want to take it one step at a time, especially in the current market condition.”
He says the priority is to launch products with an evergreen appeal, rather than ones that are popular according to the market situation but then lose their shine.
“New product ideas aside, there are things we need to do, funds that have been underperforming and are not making the CPF listing mark any more," he notes. "While we don’t do this very often, we are looking at replacing some underperforming managers in the next six months.”
However, he is cognisant of the transition costs involved, particularly when it comes to a small-cap portfolio. “It is not easy for us to change a strategy,” he notes.
There are four staff at AIA Singapore, including Tay, who carry out due diligence on external funds. They do monthly performance checks and quarterly reviews, including conference calls with portfolio managers, also attended by investment group staff from AIA Hong Kong.
Tay notes he has no hiring plans at present, with May Thanda Kyaw having joined his team earlier this year as assistant product development manager. Her remit is to focus more on covering internal insurance products as opposed to external mutual funds.