Tag Archive: Prudential

Oct
28
2009

Hot Single Premium Non-Participating Endowments

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by Martin Lee

October 28, 2009

In the past few months, we have seen a number of single premium non-participating insurance plans being launched by different life insurance companies: AIA, NTUC, Prudential, HSBC and TM Asia Life.

The plans are either 2 or 5 year terms offering yields of between 1.4% to 2.75% p.a.

  • AIA Wealth Accumulator
  • HSBC Guaranteed Saver Plus
  • PruInvestor Guaranteed Plus
  • TM NestEgg (SP Guaranteed)
  • NTUC Capital Plus

The recent trend sees the yield getting lower compared to the series that were launched earlier in the year. For example, HSBC’s current Guaranteed Saver Plus gives a yield of 1.8% to 2.0% p.a. for  a 5-year term, compared to an earlier 2.25% to 2.75%.

However, the take-up rate for these plans remains tremendous. With the plans being of “limited size”, consumers have been quick to take up the plans. The latest offering by TM Asia Life took less than a week to be fully subscribed.

Looks like this is the hot product in our market now. The liquidity fueling these products  is likely to be funds being transferred from banks.

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Oct
21
2009

Yield 15 and 20 Redemption Offer From UOB

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by Martin Lee

October 21, 2009

UOB has made a buyback offer to the 4000 customers who purchased Pru Yield 15 or Yield 20 through them.

Investors will be able to redeem back their principal less any interest they have already received if they opt for UOB’s offer by 6 Nov 2009.

This works out to be $0.88 for Pru Yield 15 and US$0.82 for Pru Yield 20.

These 2 funds were mostly sold as capital protected products but had seen their price drop to as low as $0.375 in March 2009 at the height of the credit crisis. The price has since rebounded to $0.815 and US$0.842 respectively.

Investors who do not opt for the buyback offer will have to wait until June 2010 to get a full repayment of their capital. They will have tol continue to bear default risk of the Yield 15 and 20 product.

As of 16th June 2009, there were 14 defaults out of a total of 100 entities making up the notes. The notes can take around 9 more defaults before the capital is adversely affected.

Actually, the buyback offer for the Yield 20 is a purely token one as the price of the notes is currently trading at above the buyback offer price.

Note that the buyback offer only applies to UOB customers who bought the Yield 15 or 20 through them.

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Oct
08
2009

PruInvestor Guaranteed Plus Relaunched

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by Martin Lee

October 8, 2009

Prudential has just relaunched another tranche of their single premium  5- year non-participating endowment plan – PruInvestor Guaranteed Plus. The previous tranche was in May this year.

Details of this plan are as follows:

Minimum premium : $5000

Payment mode : Cash or SRS

Eligibility : Available for those between 1 – 70 years of age for premium payment by cash, and 18 – 70 years of age for premium payment using SRS account.

Term : 5 years

Returns : 2.5% p.a. (an investment of $10,000 will grow to $11314 at maturity)

There is no health underwriting or declaration required but there is a 105% life insurance protection on the investment amount.

The plan will close on 13th November or when a total of $60-80 million is received, whichever is earlier.

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Apr
21
2009

Pru Yield 15 and Yield 20

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by Martin Lee

April 21, 2009

The Pru Yield 15 and 20 are investment products that aim to payout 3% p.a and 4% respectively in coupon and give 100% principal protection at maturity on 10 Jun 2010.

The 100% return and coupon payout is dependent on a few factors, among which:

1) Out of a list of 100 companies, there are no more than 20-30 of them that goes into bankruptcy.

2) The underlying bonds (DEPFA ACS bank, Westpac Banking Corp, BNP Paribas SA, Deutsche Bank AG(Sydney Branch)) are held to maturity and there are no defaults. A default of each company will impact the maturity value negatively by about 25%.

3) The swap counterparty, Deutsche Bank, is able to fulfil its obligations.

As of 31st Mar 2009, the NAV value of the fund has dropped more than 60% from it’s initial price. This is due to a couple of factors:

1) 4 defaults in the list of 100 companies, with 3 more being priced in.

2) A deterioration of credit conditions since Sep 08.

Based on current estimates, the product can take about another 14 (assuming 0% recovery value on the bonds of the defaulted company) and 22 defaults (assuming 30% recovery value) in the list of 100 companies before the principle will be affected.

In the event it happens, the entire capital will be at risk and unitholders might get back nothing.

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Apr
07
2009

Pru Global Positioning Strategy Fund

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by Martin Lee

April 7, 2009

The Pru Global Positioning (GPS) Fund is a fairly new fund that adopts a top down, macro approach to investing in over 33 markets via exchange traded funds, index futures and bonds.

It has an unconstrained investment approach with flexibility to go from 0-100% in equities and bonds. Currently, the cash portion of the fund is held in USD.

As the fund is an absolute return fund (aims to achieve positive returns over the medium term), it uses a slightly different benchmark of US 3-month LIBOR + 3%.

The fund is a kind of “idiot-proof” fund suitable for investors who do not want to do their own asset and sector allocation. It does not employ leverage or takes any short positions.

The fund has a 50% maximum exposure to each developed market, namely US, Japan, UK, Germany and France. For other countries, the maximum exposure is capped at 10%.

The annual management fee is 1.5%. As the fund size is currently very small (S$2.6 million as of 30th Jan 2009), the expense ratio is a bit on the high side (>2%).

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