business_opportunities_250x251Manulife will be selling 17 “Elite” funds of which five are managed by it’s own asset management arm Manulife Asset Management, and 12 from other financial institutions like Aberdeen Asset Management. They aim to grow the pool to 40 funds in the next 12 months. The funds will be sold as “pure” unit trusts as opposed to investment-linked funds. Is it a Big Deal?

Investment-linked (ILP) policies have additional charges such as annual policy fees, management fees and insurance charges. Insurance charges increase as you age, therefore generally incur greater costs for people above 40 years old.

With pure unit trusts, the costs involved with providing a small amount of insurance (usually 5% to 25% of the original investment sum) is eliminated.

For consumers with investing as a priority and are older, these new “pure” unit trusts definitely is a better proposition.

However, one has to take note about the costs of switching (if any) from one fund to another especially from different fund providers. In addition, 40 funds are not really that many, considering there are more than 450 funds available. The astute investor still has to evaluate the fund performance as well as determine the spread of asset types offered by these 40 funds.

Do they have commodities futures funds like Schroder AS Commodities? Currency funds like DWS Currency fund? A decent variety of bond funds? How about funds with absolute return mandates?

Other than giving Manulife agents new products to sell, the danger is that the agents take to the streets peddling products instead of giving suitable investment advice. Financial Advisers intending to make investment management one of their business lines ought to receive adequate training and be more conservative in their approach.

How would other insurers react? Likely, to also be looking at expanding their offerings in due time.

As for other financial advisers, if insurers were to follow in the foot-steps, you’ll probably be needing to pass M8 – Collective Investment Scheme, so get it done as soon as you hear wind of it happening in your company.



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