SIP LIFESTYLE PORTFOLIOS FACT SHEET (OCT 2015) SIP Aggressive Portfolio SIP Aggressive Portfolio is a unitized fund, which is designed to provide long term capital growth. It is designed for those who hold a long term investment view and who are prepared to accept significant fluctuations in the value of their investment in order to achieve long term returns. MGF - American Growth Fund (A Share) 41.0% MGF - US Small Cap Equity Fund (AA Share) 15.9% MGF-Global Property Fund (AA Share) 2.2% MGF-European Growth Fund (A Share) 13.5% MGF-Japanese Growth Fund (A Share) 5.3% MGF-Asian Equity Fund (A Share) 1.8% MGF-Global Resources Fund (AA Share) 4.9% MGF-US Bond Fund (AA Share) 7.2% MGF-US Special Opportunities Fund (AA Share) 10.4% MGF-US Treasury Inflation-Protect Fund (AA Share) 3.2% Information Liquidity and others -5.2% Investment Management Fee : 1.40% per annum NAV per Unit 1.2040 6.37 million : 5.29 million SIP Growth Portfolio SIP Growth Portfolio is a unitized fund, which is designed to provide medium to long term capital growth for those who hold a long term investment view and who are prepared to accept considerable fluctuations in the value of their investments in order to achieve long term returns. Fund MGF - American Growth Fund (A Share) 34.2% MGF - US Small Cap Equity Fund (AA Share) 4.2% MGF-Global Property Fund (AA Share) 7.2% MGF-European Growth Fund (A Share) 8.2% MGF-Japanese Growth Fund (A Share) 3.1% MGF-Asian Equity Fund (A Share) 1.2% MGF-Global Resources Fund (AA Share) 5.0% MGF-US Bond Fund (AA Share) 18.5% MGF-US Special Opportunities Fund (AA Share) 16.5% MGF-US Treasury Inflation-Protect Fund (AA Share) 5.3% Information Liquidity and others -3.4% Investment Management Fee : 1.30% per annum NAV per Unit 1.2607 5.98 million : 4.74 million 1 Month 3 Months 6 Months YTD 1 Year 3 Years 5 Years Since Inception Fund 1 Month 3 Months -1.54% 6 Months Aggressive Portfolio 7.80% -2.42% -2.81% 0.69% -0.51% 18.61% 21.40% 20.40% Growth Portfolio 6.24% -2.35% YTD 0.45% 1 Year -1.12% 3 Years 14.32% 5 Years 19.06% Since Inception 26.07%
SIP Balanced Portfolio SIP Balanced Portfolio is a unitized fund, which is designed to provide medium to long term capital growth for those who hold a long term investment view and who are prepared to accept fluctuations in the value of their investments in order to achieve long term returns. MGF - American Growth Fund (A Share) 21.5% MGF - US Small Cap Equity Fund (AA Share) 4.2% MGF-Global Property Fund (AA Share) 5.2% MGF-European Growth Fund (A Share) 7.9% MGF-Japanese Growth Fund (A Share) 2.7% MGF-Asian Equity Fund (A Share) 1.0% MGF-Global Resources Fund (AA Share) - MGF-US Bond Fund (AA Share) 42.4% MGF-US Special Opportunities Fund (AA Share) 13.5% MGF-US Treasury Inflation-Protect Fund (AA Share) 4.1% Information Liquidity and others -2.5% Investment Management Fee : 1.20% per annum NAV per Unit 1.2908 5.18 million : 4.01 million Fund Balanced Portfolio 1 Month 3.91% 3 Months -1.47% 6 Months -2.37% YTD -0.24% 1 Year -1.70% 3 Years 10.99% 5 Years 15.94% Since Inception 29.08% The SIP Lifestyle Portfolios are managed by Manulife Asset Management Services Berhad and are fund of funds structures. They invest all or substantially all of their assets into the Underlying Funds under the Manulife Global Fund platform. Please refer to the for the list of the Underlying Funds and the allocation for the respective portfolios. Past performance is not an indication for future results. This report is prepared for information purposes only. Important Notes: The fund performances are strictly the performance of the investment-linked (IL) fund and not to be treated as the gross premium/contribution of the IL insurance product. In the event of exceptional circumstances, such as high volume of sale investment within a short period of time, Manulife Insurance Berhad ("the Company") reserves the right to defer or suspend issuance or redemption of units. Page 2 of 5
and Outlook (Oct 2015) Asia Pacific ex Japan Asian equities gained over the month as reduced prospects of a hike in US interest rates, a rate cut in China and the prospect of more easing from the European Central Bank buoyed investor sentiment. In the US, GDP grew by 1.5% on-year in the third quarter, down from 3.9% in the previous quarter. Non-farm payrolls rose by 142,000 in September, considerably lower than expected while retail sales and manufacturing data were also weaker than expected. In China, third quarter GDP beat expectations, expanding 6.9% on-year. Retail sales and housing prices also rose in September. However inflation cooled more than expected in September to 1.6% on-year while September trade data disappointed as exports fell 3.7% while imports dropped a larger-than-expected 20.4%. The People s Bank of China cut interest rates for the sixth time in a year ahead of the government s fifth plenum meeting. In Hong Kong, retail sales fell for the sixth straight month in August following a drop-off in tourist arrivals from mainland while inflation eased for a third straight month in September to 2%. In Taiwan, third quarter GDP fell 1.01% on-year while trade data remained sluggish as exports and imports continued to fall in September. In South Korea, third quarter GDP rose to a five-year high expanding 1.2% while the Bank of Korea cut its policy rate for a second time this year to a record-low of 1.5%. In India, industrial production grew at a near three-year high of 6.4% in August while inflation rose to 4.4% in September. In Indonesia, inflation cooled to 6.8% in September while the trade surplus was higher than expected as imports fell faster than exports. In Malaysia, the government revealed its 2016 budget and expects GDP to be between 4.5%-5.5% in 2015. Exports in August rose 4.1% on-year while imports declined 6.1%. In Thailand, inflation fell in September to 1.1% on-year. Exports fell 5.5% from a year earlier while imports were down by 26.2%. In Singapore, the economy avoided a technical recession in the third quarter, expanding 0.1% from the previous three months while the central bank eased monetary policy by reducing the rate of appreciation of the Singapore dollar. In Australia, inflation rose less than expected in the third quarter up 0.5% while unemployment in September remained steady at 6.2%. Although the rally over the past month has been swift, we are cautiously optimistic the markets can gradually advance for the remaining months of the year. We are particularly encouraged by developments in North Asia. Large South Korean corporates are better aligning their interests with those of minority shareholders through share buybacks and higher dividend payouts. In Taiwan, several merger and acquisition transactions have been announced, showing a change in culture and recognition of the increasing competition from Chinese companies. While the quarterly earnings announcements have been generally mixed, a number of our holdings, particularly in the technology and consumer discretionary sectors, are continuing to deliver and offer constructive outlooks. North America October was the S&P 500 s best month in four years, thanks to the US Federal Reserve Board s decision to postpone an interest-rate hike and easing fears about China s economic problems. Within the S&P 500, materials and energy stocks posted the strongest gains, bouncing back from oversold levels. The information technology, industrials and consumer discretionary sectors also were strong performers, as investors rewarded companies that could beat earnings estimates despite sluggish global economic growth. Going forward, we plan to stay focused on good quality companies that are selling at discounts relative to their intrinsic value. We continue to find some of the best opportunities in financials, consumer discretionary and information technology sectors, as they stand to benefit as the US economy continues to recover. Europe European markets rallied on data showing that the Chinese economy, which is one of Europe s most important trading partners, expanded 6.9% in the third quarter of 2015, allaying concerns of a sharp deceleration. European equities also rose after European Central Bank President Mario Draghi hinted at the possibility of further quantitative easing on top of the current monthly bond purchases of 60 billion euros. In response, the euro fell 1% over the month against the US dollar. Healthcare was the worst-performing sector in light of growing resistance in the US against what has been perceived as price gouging by some pharmaceutical companies. Energy shares performed strongly, helped by stabilising oil prices and a commitment by several leading players to slash capital expenditures and focus on cash generation. We expect European earnings and markets to perform relatively well over the next 12 to 24 months, after years of lagging the US, as recent economic indicators have pointed to a pickup in consumer confidence. However, we also expect European growth to moderate over the short term in response to a slowdown in emerging markets. We will continue to focus on investing in strong franchises with long-term growth drivers that are trading at less than our assessment of fair value. Page 3 of 5
and Outlook (Oct 2015) (continued) Japan The Japanese market bounced back gaining 10% over the month after a quarter of negative performance. This was in line with other global markets, although Japan slightly outperformed, even in US dollar terms. The market was preoccupied with the possibility of additional quantitative easing (QE) by the Bank of Japan, but this did not eventuate. The reality is that there is no requirement for further QE as core CPI (ex food and energy) is experiencing a steady improvement rising a further 0.1% to 0.9% in September. The best performing sectors over the month were paper, steel and precision instruments while the worst performing were retail, textiles and construction. The stronger performing sectors were all exporters while the weaker performing sectors were mainly domestic in a reversal of previous months. Among the strongest performers were Yamato Kogyo and Daido Steel while some of the weakest performers included Fast Retailing, Asahi Kasei and Toyo Tire. Fast Retailing had a poor set of financial numbers with disappointing results both in the US and in Japan. Asahi Kasei suffered from a scandal over a faulty building in Yokohama and Toyo Tire from a scandal over producing rubber materials which failed to meet regulatory requirements. The recent volatility in the Japanese market has led many investors to question the long-term outlook for Japanese equities. The concerns over the lack of domestic growth opportunities and the declining demographic outlook as well as the heavy burden of government debt remain. However, the Japanese market has been the only global market which has grown aggregate earnings at 10% or more over the last three years. First half earnings, which will be announced over the next few weeks, should confirm an outlook of continued double digit earnings growth. Early announcements from Nissan Motor (+51% first half operating profit, +24% full year operating profit forecast) which revised its full year forecast up by 8% and Pola Orbis (+47% nine month operating profit, +19% full year operating profit forecast) which revised up its full year forecast by 5% confirm a positive outlook for Japanese earnings, at least within the consumer sector. The focus on improving returns and more efficient use of corporate cash positions is also starting to have a positive effect. The government is in the process of lowering corporate tax rates and is looking at incentivising corporates to spend their cash piles rather than just have them sitting on their balance sheets. This should drive a further leg to Japan s economic recovery. Global Global equity markets recovered over the month as investors became more optimistic following a difficult third quarter. Major global equity benchmarks posted strong gains, with the S&P 500 Index returning 8.4%, the Stoxx Europe 600 Index returning 8.0% and Japan s Nikkei 225 Index gaining 9.8%. The MSCI World Index returned 7.9%. Investors were pleased by talk of further stimulus from the European Central Bank, a rate cut in China and softer economic data potentially delaying a US Federal Reserve Board (Fed) interest rate hike. Adding to investor optimism was a recovery in the price of oil and diminished concern about the negative impact of China s economic slowdown. We believe US equity markets have slightly above-average valuations on earnings but are highly valued on a cyclically adjusted priceearning basis. Forward estimates may generally prove optimistic, particularly considering the potential peaking of margins and declining impact of share buybacks. European multiples appear cheaper than their US counterparts, in our view, and may have more earnings recovery potential, although much of this is sourced in structurally challenged industries. We remain cautious of excess debt and continue to focus on companies with what we believe to be sustainable cash flow streams. Page 4 of 5
SIP Lifestyle Portfolio (Oct 2015) (continued) Investment in the fund is subject to certain risks, including but not limited to: Risk Type Description Risk Management (Bond funds) Risk Management (Equity funds) The selection of securities which make To mitigate this risk, the investment up the investments of the fund is Manager has in place a disciplined Manager has in place a disciplined subjective and securities selected may investment process and practices prudent investment process and practices prudent Fund Management Risk perform better or worse than overall risk management. risk management. In addition, risk is also market. monitored through risk models. Liquidity Risk Market or Price Risk The risk of the funds being unable to meet their obligations at the reasonable cost or at any time. Market risk arises when the value of the securities fluctuate in response to the general market and economic conditions. Manager will review and monitor the Fund continuously, and actively manage asset allocations of the Fund. In addition, the investment Manager will practice prudent liquidity management to enable the Fund to meet short term obligations. The Investment Manager will attempt to diversify the portfolio, and monitor the investment climate and market conditions to take measures, where necessary and appropriate, to mitigate this risk. Manager will review and monitor the Fund continuously, and actively manage asset allocations of the Fund. In addition, the Investment Manager will practice prudent liquidity management. This risk is managed through sector/stock diversification and asset allocation. Timing Risk Company / Stock Specific Risk Interest Rate Risk Inflation Risk Credit Risk The risk is subject to the volatility of the market/interest rate. The risk of loss due to the fall of stocks/shares prices given the deteriorating business condition. The Investment Manager will manage it based on its professional knowledge and experienced investment skill. N/A The interest rate is a general economic This risk will be mitigated via the N/A indicator that will have an impact on the management of the duration of the fixed management of the Fund. This risk income securities. refers to the effect of interest rate changes on the market value of fixed income securities. In the event of rising interest rates, prices of fixed income securities will decrease and vice versa. Meanwhile, fixed income securities with longer maturities and lower coupon/profit rates are more sensitive to interest rate changes. This is the risk that investors' The risk may be mitigated by investing in N/A investment in the Fund may not grow or fixed income securities that can provide generate income at a rate that keeps positive real rate of return. pace with inflation. The risk of loss due to the counter Credit risk may be managed by performing N/A party's inability to make payment of continuous fundamental credit research and coupon/profit and/or principal. analysis to ascertain the creditworthiness of its issuer. Timing risk will be managed via technical tools (i.e. from Bloomberg) as well as based on the Investment Manager's professional knowledge and experience investment skill. Manager will be performing continuous research and analysis on the balance sheet strength, earnings generation capability and strength of management team of the company. Page 5 of 5