4 Dec 2008
Statement to Berita Harian on Closing and Merging of Funds
4 December 2008 - As part of regular fund reviews to help policyholders maximize returns at competitive costs, NTUC Income will be closing three funds and merging two funds with effect from March 2009. The funds earmarked for closure are the Japan Equity Fund, Europe Equity Fund and the Amanah Bond Fund. The two funds that will be merged are the Amanah Equity Fund and Takaful Fund.
These funds will be closed or merged because they have asset sizes that are below the optimum size (see table below for fund sizes), making the cost of maintaining them relatively higher, possibly resulting in erosion of future investment returns. This move is a reflection of our commitment to help policyholders maximize returns at competitive costs, and is not related to the current market conditions.
With the merger of the Amanah Equity Fund and the Takaful Fund, this single fund will now have an optimal fund size with similar investment objectives, designed based on Islamic principles to achieve long-term capital appreciation. According to the recent fund ratings by Lipper, the Income Takaful Fund was rated 'Lipper Leader' in the categories measuring 'Total Return', 'Consistent Return' and 'Preservation'. With this merger, the resultant fund will be strengthened to achieve greater economies of scale and enhance future investment returns.
NTUC Income will continue to closely monitor the development of the Islamic fund market, and future product launches will depend on the potential viability and cost efficiency of the fund. Any decision to introduce new funds will be done in the best interest of policyholders.
In order to protect its policyholders' interests and help them stay invested to benefit from improvement in market conditions in the future, NTUC Income will offer 0.5% bonus units to encourage policyholders affected by the change to switch to the other funds in its stable, where about half of its CPF-approved investment-linked policy funds were rated 'Lipper Leader' in Lipper's recent fund ratings report.
Policyholders who do not wish to switch to another available fund may choose to redeem their investments. All affected policyholders will be notified of the change and their options by post, and costs associated with the closure or switching of the funds will be borne by NTUC Income. For more information, policyholders should contact their insurance advisers or call NTUC Income's Customer Service Officers at 63 INCOME or 6346 2663.