November 22, 2012

Manulife PRS Funds Explained

Manulife PRS NesteggManulife Asset Management Services Berhad is the third private retirement scheme (PRS) provider in Malaysia that recently launched their PRS funds. As a beginning, Manulife will have 3 core funds, namely Manulife PRS Growth, Manulife PRS Moderate and Manulife PRS Conservative funds. Manulife PRS Growth Fund is targeting those investors below age of 40 years old or have high risk profile, while for Manulife PRS Moderate Fund is a balanced fund targeting those investors between the age of 40 - 50 years old or have moderate risk profile. Manulife PRS Conservative Fund is a fixed income fund with a small portion of equity investment, is meant for those over 50 years old or have low risk profile. Manulife PRS Growth and Manulife PRS Moderate funds will have up to 30% of equity allocation for investments in Asia Pacific markets.

The summary of Manulife PRS funds information is available below:

So, what's the difference between HwangIM PRS Solutions, CIMB-Principal PRS Plus and Manulife PRS offerings? Here's my attempt to summarize the differences:

  1. PRS Funds: CIMB-Principal offers more PRS funds, but all but one fund invest only in local equities. I like HwangIM PRS Solutions and Manulife PRS funds which i think offer local equities defensiveness with some potential upside due to some small allocation (up to 30%) for Asia Pacific ex Japan equities.
  2. Investor Class: CIMB-Principal PRS offerings are quite confusing to investors due to its investors classifications (which is depends on CIMB-Principal discretion). Manulife PRS also have investor classification based on the length of investors loyalty to Manulife. Both offerings are not to my likings.
  3. Sales charge: Big drawback for CIMB-Principal and Manulife as they charges 3% and 2% sales charge respectively as opposed to 0% by HwangIM PRS Solutions.
  4. Fees: This is the part that CIMB-Principal trump HwangIM PRS Solutions and Manulife PRS offerings. Annual management fee is generally lower than HwangIM PRS and Manulife PRS funds. PPA annual fee of RM 8 is absorbed by CIMB-Principal whereas in HwangIM PRS and Manulife PRS, investors have to fork up the fee individually. However, CIMB-Principal has their own account opening fees which can be waived if you invest at least RM 1000/contribution or setup monthly RSP contribution of at least RM 100. Manulife PRS is the worst PRS provider in terms of fees charged to investors due to their extremely high annual management fees and the presence of redemption charge within 5 years of investment.
  5. Fund Provider Performance: While no PRS providers have any performance track record so far, but based on recent years of unit trust funds performance, it seems like HwangIM is a better performer. Of course, past performance is not representative of future performance. Take this with a pinch of salt please.

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