I have invested in the (modified) Permanent Portfolio for slightly over 3 years now. And I'm considering abandoning it.
Don't get me wrong, it is not that I am giving up or that I no longer believe it works. It is because I have found another strategy that should give even higher returns.
Even if the Permanent Portfolio works as it should, it generates an average compounded returns of 9%. However, the other strategy generates 15% returns, based on backtested data as well.
As this strategy involves investing in US equities as well, and currently, the US market is at the 3rd highest CAPE ratio in the 130-year history (27.1 at time of writing), I am waiting for a correction to happen before I make the final decision. If that happens, I can also see for myself what happens to my Permanent Portfolio.
I'll wait...
Friday 17 July 2015
Friday 10 July 2015
Insurers Participating Fund Performance
I remember a few years back when buying insurance policies, there are two illustrations of the Cash Value of the policy, depending on the Insurer's Participating Fund (a.k.a. Par Fund) investment returns of 3.75% or 5.25%.
Currently, it seems the industry standard has lowered the illustration for returns of 3.25% and 4.75%.
As the the Cash Value of these illustration can only be realised only if the underlying Par Fund achieve at least those returns, I set to find out the past performance of the different Par Funds for the more common insurers.
First, I present the Par Fund's Expense Ratio, extracted from comparefirst.sg.
From the above data, it is clear that why Tokio Marine is the only insurer in Singapore to have honoured their bonus projections for the past 66 years.
Currently, it seems the industry standard has lowered the illustration for returns of 3.25% and 4.75%.
As the the Cash Value of these illustration can only be realised only if the underlying Par Fund achieve at least those returns, I set to find out the past performance of the different Par Funds for the more common insurers.
First, I present the Par Fund's Expense Ratio, extracted from comparefirst.sg.
| 2011 | 2012 | 2013 | 2014 | Average | ||
| AIA | 0.12% | 0.13% | 0.10% |
0.12%
|
||
| Tokio Marine | 0.12% | 0.11% | 0.10% |
0.11%
|
||
| Great Eastern | 0.21% | 0.22% | 0.23% |
0.22%
|
||
| NTUC Income | 0.153% | 0.147% | 0.160% |
0.15%
|
||
| Manulife | 0.17% | 0.17% | 0.17% |
0.17%
|
||
| Prudential | 0.27% | 0.27% | 0.26% |
0.27%
|
||
Next, I have collected the individual year performance of each insurer's Par Fund and obtained the following cummulative performance from beginning of year 2005:
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | CAGR | |
| AIA | 100% | 101.7% | 108.2% | 114.9% | 102.0% | 115.4% | 123.7% | 124.8% | 137.1% | 138.4% | 3.68% | |
| Tokio Marine |
100% | 113.2% | 130.8% | 146.8% | 121.6% | 146.0% | 155.8% | 154.7% | 171.0% | 175.0% | 186.3% | 5.76% |
| Great Eastern |
100% | 105.0% | 113.8% | 126.2% | 112.0% | 122.6% | 130.7% | 132.7% | 145.7% | 151.0% | 4.68% | |
| NTUC Income | 100% | 106.8% | 118.3% | 131.0% | 116.5% | 130.4% | 138.1% | 136.9% | 148.6% | 151.1% | 159.3% | 4.21% |
| Manulife | 100% | 103.5% | 119.8% | 131.1% | 119.8% | 139.7% | 149.9% | 148.5% | 164.4% | 162.8% | 5.57% | |
| Prudential | 100% | 107.4% | 122.2% | 133.0% | 101.2% | 124.9% | 133.9% | 134.1% | 148.9% | 156.6% | 165.9% | 4.59% |
From the above data, it is clear that why Tokio Marine is the only insurer in Singapore to have honoured their bonus projections for the past 66 years.
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