SG Asset Management has teamed up with NTUC Income, the insurance arm of the National Trades Union Congress, to launch a multi-sector insurance-linked guaranteed fund which will be made available to more than 900,000 policyholders.
SG will manage the Dynamic Guaranteed Fund by rotating the equity portion of the fund through various global equity sectors, making it the first actively managed fund of its kind in Singapore. The fund has a five-year maturity and offers investors a 100% capital guarantee and a 50% profit lock-in of the highest gains. At maturity, investors will receive their initial capital plus any profits locked-in by the fund or the fund's bid price at maturity, whichever is higher.
The minimum investment is S$5,000 and investors pay a 1.3% management fee plus a S$100 policy fee or sign-up fee. Redemptions are made weekly but early withdrawals suffer a charge of 1% of bid price.
The fund, which launches officially on August 3, is likely to appeal to Singapore's more conservative investors, especially because it will be distributed to investors who hold NTUC Income insurance policies. NTUC Income, a co-op insurance society, has accumulated S$3.4 billion in assets since its inception in 1970. The co-op was launched as part of the government's "Modernization of the Labour Movement" push in the late-1960s.
Unlike most other guaranteed funds that allocate the bulk of their subscriptions to bonds, SG claims it has the mandate to invest up to 100% of the fund in global equities. While SG was unwilling to comment on the exact make-up of the fund prior to the launch, literature marketing the fund to NTUC policyholders says that this 100% equity holding will only occur "in a strong bull run". NTUC members are being told that: "The fund ensures you maximum exposure to the hottest sectors that may include energy, pharmaceuticals, multimedia and finance."
As an added incentive, policyholders are being offered three times the insurance cover for death and permanent disability during the five-year duration of the fund if they sign up.