HE SAYS, SHE SAYS
The perennial debate of active versus passive investing has been bubbling away for years. Proponents of active investing argue that these funds tend to outperform the benchmark as their aim is to seek alpha, which comes at a higher cost. On the other hand, advocates of passive investing contend that these funds are much cheaper, as they only aim to replicate beta. Indeed, Exchange-traded Funds (ETFs) have been growing popularity over the past decade, attracting record inflows in the first half of 2021.
That said, there are always two sides to a story. We believe that both strategies have a place in portfolio construction, and diversification is crucial for investors who want to get exposure to the best opportunities globally.
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BANG FOR YOUR BUCK
Here at Lion Global Investors, having a local heritage as well as parentage, we design our solutions for Singaporean investors, and with Singaporean investors in mind. Our All Seasons Fund was the brainchild of our CEO, Gerard Lee. His mission was simple – to promote low-cost investing because there are simply too many layers of fees that deter general mass market from investing.
This is made more relevant in today’s digital economy, where simple and affordable investing is of priority. To this end, our total expense ratio is being capped at 0.5% p.a., vs most other active funds at 1.5%. One reason why we are able to lower our Total Expense Ratio (TER) is our ability to leverage our size to lower the costs from underlying Lion Global Investors’ funds that we invest in.
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NUMBERS SPEAK LOUDER THAN WORDS
This is an illustration to show you the difference in investment returns with a TER of 0.5% vs 1.5%, holding all things equal. Investment firm, Morningstar has showed that TERs are a predictor of future fund funds. In fact, the cheapest-quintile funds were three times as likely to succeed as the priciest quintile. Bottom line – one way to earn higher investment returns is to pay lower fees. Hence the old adage goes, every cent counts.
An Illustration
- Investment Amount: $100,000
- Annual Returns: 5% p.a.
- Period: 20 years
1Global ETFs draw record inflows in first half of 2021 – Reuters
2The Best Predictor of Future Fund Performance – CBS News
*Total Expense Ratio (TER) s the sum of various identified operating expenses charged on an ongoing basis to the fund’s assets as a percentage of the fund’s average net asset value calculated over a 12-month period at the close of the annual and semi-annual financial statements of the fund. A 5% p.a. rate of return is based on an investment into a 50% Equity and 50% Bond portfolio on the assumption that equity returns 8% p.a. and bonds return 2% p.a. and is not indicative of the expected return of the LionGlobal All Seasons Fund (Growth) / (Standard). Past performance, as well as any prediction, projection, or forecast on the economy, securities market, or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. TER of 1.5% p.a. is based on Morningstar Benchmark Global Flexible Allocation as of 31 December 2019.
COME RAIN OR SHINE
Our All Seasons Funds (Standard and Growth) – as its name clearly suggests – aim to help investors better weather all seasons of volatility. It is a globally diversified strategy that provides access to opportunities via both active and passive instruments with 2 underlying asset classes (equities and fixed income) and across 8 strategies.
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TWO FLAVORS – TAKE YOUR PICK
It provides two options from different risk profiles – a Standard portfolio where there is a greater allocation on fixed income or bonds, as well as a Growth portfolio where there is a greater allocation on equities. These portfolios are rebalanced every month to maintain its intended allocations, as well as to reflect changes in the market dynamics, and the global economic outlook. On the back of Singaporean investors’ hunt for yield in this low interest rate environment, we have also recently introduced the monthly share class distribution (3% p.a.).
Source: Lion Global Investors, as of 31 August 2021. Opinions and estimates constitute our judgment and along with other portfolio data, are subject to change without notice.
LIONGLOBAL ALL SEASONS FUND
^Proposed Distribution: Distribution class | 3.0% p.a. Decumulation class| 5.0% – 8.0% p. Distribution payments shall, at the sole discretion of the Manager, be made out of either (a) income; or (b) net capital gains; or (c) capital of the fund or a combination of (a) and/or (b) and/or (c). The declaration and/or payment of distributions (whether out of income and/or capital) may have the effect of lowering the net asset value of the fund. Past payout yields and payments do not represent future payout yields and payments. Distributable income refers to the interest and dividend income, taking into consideration the net realised gains from portfolio holdings and are payable to investors, but net of all fees and expenses, include management fees and distribution cost. For detailed income statistics, please visit www.lionglobalinvestors.com
Disclaimer
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. It is for information only, and is not a recommendation, offer or solicitation for the purchase or sale of any capital markets products or investments and does not have regard to your specific investment objectives, financial situation, tax position or needs. Applications for units in our funds must be made on forms accompanying the prospectus. You should read the prospectus and Product Highlights Sheet which is available and may be obtained from Lion Global Investors Limited (“LGI”) or any of its distributors, consider if a fund is suitable for you and seek such advice from a financial adviser if necessary, before deciding whether to invest in the fund. Investments in our funds are not obligations of, deposits in, guaranteed or insured by LGI or any of its affiliates and are subject to investment risks including the possible loss of the principal amount invested. The performance of a fund is not guaranteed and the value of units in a fund and the income accruing to the units, if any, may rise or fall. Past performance, as well as any predictions, projections, or forecasts are not necessarily indicative of the future or likely performance of a fund. Any extraordinary performance may be due to exceptional circumstances which may not be sustainable. Dividend distributions, which may be either out of income and/or capital, are not guaranteed and subject to LGI’s discretion. Any such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value of the fund. Any information (which includes opinions, estimates, graphs, charts, formulae or devices) is subject to change or correction at any time without notice and is not to be relied on as advice. You are advised to conduct your own independent assessment and investigation of the relevance, accuracy, adequacy and reliability of any information contained herein and no warranty is given and no liability is accepted for any loss arising directly or indirectly as a result of you acting on such information. The fund may, where permitted by the prospectus, invest in financial derivative instruments for hedging purposes or for the purpose of efficient portfolio management. LGI, its related companies, their directors and/or employees may hold units of a fund and be engaged in purchasing or selling units of a fund for themselves or their clients. This publication is issued in Singapore by Lion Global Investors Limited (Singapore UEN/ Registration No. 198601745D) and in Brunei, by its branch (Brunei company registration No. RFC/00000772). Lion Global Investors Limited is a Singapore incorporated company and is not related to any asset or fund management entity that is domiciled in Europe or the United States. Lion Global Investors® is a registered trademark of Lion Global Investors Limited.
The references to any particular company is intended for illustration purposes only and is not indicative of our intention to invest in such company or a recommendation to invest in the securities of such company.
