Retirement is a significant life goal and milestone for most individuals. To many, after spending decades of working in 9-to-5 jobs, retirement seems like a godsend with the promise of the freedom to pursue their personal interests.
However, retaining a fulfilling and comfortable lifestyle post-retirement will, naturally, require meticulous financial planning, as well as maximising investment opportunities.
According to Oversea-Chinese Banking Corporation’s (OCBC) latest annual Financial Wellness Index released in November 2023, Singaporeans are postponing their longer-term financial plans to prioritise other needs such as paying off debt. The move comes amid the current high interest rate environment, but it also means Singaporeans will have to start planning for their retirement at a later age.
The survey, which polled 2,000 working adults aged between 21 and 65 years old in August 2023, noted that about only 35% of them had their retirement plans on track, down from 42% in 2022’s edition.
The survey also found that more people were considering alternative retirement strategies such as working beyond the official retirement age or retiring overseas where the cost of living is lower. The current minimum retirement age is 63 years, but this will be raised to 69 in 2026, announced Minister of State for Manpower Gan Siow Huang in Parliament on March 4, 2024. This is in line with the increasing life expectancy in Singapore, with an estimate of 33.3% of Singaporeans to be 65 years and older by 2050 (Source: Statista Dec 2023).
“This places pressure on Singapore’s society as the shrinking workforce will need to support an ageing population. There would also be pressure on healthcare services and eldercare facilities due to increased competition for such needs,” says Kwok Keng Han, Chief Marketing Officer at Lion Global Investors.
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“Everyone has different goals and challenges on what they view as a comfortable retirement, but common challenges would include rising inflation, with greater costs of housing, healthcare, transport, food and medication,” he adds.
These challenges mean investors need to make active investments in order to cope with rising inflation and to build a healthy retirement portfolio.
Amid the various ways to save up for one’s retirement, the Central Provident Fund (CPF) is one of the tools Singaporeans and PRs can leverage. Beyond earning interest on the CPF’s ordinary account (OA), special account (SA), retirement account (RA) and the Medisave account (MA), one may also consider making investments using their CPF accounts.
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“As CPF is the key pillar of Singapore’s social security system which serves to meet Singaporeans’ retirement needs, it is important for Lion Global Investors to be closely aligned with their goals and objectives for Singaporeans,” says Kwok.
This is where Lion Global Investors comes in. Established in Singapore in 1986, the asset manager, which is part of Great Eastern and the OCBC Group, focuses on managing Asian fixed income, equity and multi-asset strategies for both institutional and retail investors.
As a key local player, Lion Global Investors focuses on offering homegrown retirement solutions, as compared to global fund houses that offer global or hybrid solutions, as the Singapore dollar hedging can enable significant benefits for a local investor.
“There is often a currency mismatch for retirement solutions available in Singapore which local investors do not think much of. The difference between a homegrown approach versus a global manager approach can actually play out to different outcomes. If you are investing from a USD or EUR perspective, your assets will be affected should the foreign currency depreciate. If you are taking an SGD approach, your assets may remain relatively stable,” says Kwok.
All-weather solution
The way Kwok sees it, there are several ways to go about having a strategy to build a retirement fund. However, Lion Global Investors has a preference. “We like to approach this from a core and satellite solution strategy. From our suite of retirement solutions, the LionGlobal All Seasons Fund (ASF) — both Growth and Standard — is our core solution, supplemented by satellite solutions from our stable of CPFIS included funds,” he says.
The LionGlobal ASF (Growth) and LionGlobal ASF (Standard) are designed as efficient, diversified portfolios. While they may be used as a standalone investment, they can also be blended with other products that potentially offers resilient returns to investors, supporting regular distributions*. The funds offer a clear cost advantage whereby the total expense ratio (TER) is capped at 0.50% per annum, regardless of the asset under management (AUM).
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The funds are designed for SGD-based investors and utilise both passive and active strategies to better weather volatile economic cycles, making them more resilient in the long run. The funds are also tailored for different risk profiles: there are two portfolios — Standard portfolio for lower risk appetite and Growth portfolio for higher risk appetite.
These solutions are highly customisable and mindful of individual investors’ risk appetite. Kwok elaborates on a glide path that allows investors to customise their asset and fund allocation to “increase more low-risk assets as they approach their retirement age”.
For instance, the ASF Growth and ASF Standard funds can be combined in a 70:30, 50:50 or 30:70 split depending on the investors’ individual risk appetite and goals.
Homegrown solutions
In addition to the LionGlobal ASF, Lion Global Investors offers a full suite of CPFIS registered funds, enhancing Singaporeans’ retirement portfolios. These include: Infinity Global Stock Index Fund SGD; LionGlobal Asia Pacific Fund SGD; LionGlobal Japan Growth Fund SGD H; LionGlobal Singapore Fixed Income Investment Fund; and LionGlobal Short Duration Bond Fund Class A SGD (Dist).
According to Kwok, these funds are meticulously managed to align with CPF investment guidelines and allow investors to have a more customised solution. The LionGlobal ASF is a starting point for investors which can be enhanced by supplementing it with other strategies to increase or reduce the risk profile to meet the individual investors’ objectives and help them achieve their retirement goals.
“The beauty of these solutions is that we have designed them to act as building blocks and they can be flexibly customised according to an individual’s risk appetite,” says Kwok. “This ensures we have a fully customisable solution depending on an investor’s risk tolerance, their goals and where they are at on the retirement scale.” Investment customisation is important to cater to individual preference and to mitigate the challenges investors face when retiring in Singapore.
Regardless, retirement planning for all should start as early as possible. “Small amounts can make a difference over time so it is important to start saving for your retirement through a disciplined regular investment programme,” advises Kwok.
Younger investors who have a longer runway to retirement are able to take more risks in the LionGlobal ASF (Growth) Fund, along with higher risk strategies to have a higher equity allocation, although there can be exceptions to the norm. For example, Kwok elaborates that young investors can consider adding on the LionGlobal Asia Pacific Fund if they are keen on Asia Pacific strategies, or adding on the LionGlobal Japan Growth Fund if they like the Japan story. For older investors above 55, a possibility is to buy into the LionGlobal ASF (Standard). Depending on their retirement runway (when they plan to retire), they can also add on more LionGlobal Short Duration Bond Fund into their portfolio.
“We want to accompany investors on their retirement journey, so that when they think of retirement, Lion Global Investors will come to mind,” he added.
All the above funds can be bought through the OCBC Group, as well as Lion Global Investors’ major partners such as Fundsupermart, Phillip Securities, Grow with Singlife and UOB Kay Hian.
SIDEBAR: The LionGlobal ASF Growth and LionGlobal ASF Standard
The LionGlobal All Seasons Fund (ASF) Standard targets a below-average level of portfolio risk and will be invested in a mix of asset classes for an investor with a below-average tolerance for risk. It is aimed at generating long-term capital appreciation through investing in a diversified portfolio of active funds and exchange-traded funds (ETFs).
As at May 31, the fund is 68.4% weighted towards fixed income, 31.47% towards equities with the remaining 0.13% in cash equivalents. Its country allocations for equities are US (31.76%), Asia Pacific ex-Japan (30.98%), Europe (27.82%) and Japan (9.45%). For fixed income, its country allocation are Singapore (56.62%), Asia Pacific ex-Japan (27.67%), Japan (1.72%) and others (13.99%). Its total fund size is at $112.62 million and its NAV is at $1.217.
Meanwhile, the LionGlobal ASF Growth targets an above-average level of portfolio risk and will be invested in a mix of asset classes for an investor with an above-average tolerance for risk. The fund’s portfolio comprises active funds and ETFs.
As at May 31, the fund is 70.98% weighted towards equities, 28.57% towards fixed income and 0.45% in cash equivalents. Its country allocations for equities are US (31.67%), Asia Pacific ex-Japan (31.03%), Europe (27.58%) and Japan (9.73%). Its allocations for fixed income by country are Singapore (55.64%), Asia Pacific ex Japan (28.85%), Japan (1.72%) and others (13.79%). Its total fund size is at $130.53 million and its NAV is $1.384.
Note:
All data on the LionGlobal ASF are sourced from Lion Global Investors unless otherwise stated. Information is accurate as of 31 May 2024.
This advertisement has not been reviewed by the Monetary Authority of Singapore. It is for information only and is not a recommendation, offer or solicitation. You should read the prospectus available at www.lionglobalinvestors.com before deciding whether to invest in the Fund. Investments involve risks including the possible loss of the principal amount invested.
Lion Global Investors® Limited (UEN/ Registration No. 198601745D)
*Distributions are not guaranteed. Distributions may be made up of income, capital gains, and/or capital.
