Invest in the Combined Fund

Hello Mr Tan

1) I read a lot about the NTUC low cost funds on your blog. Recently, I invested through SRS as follows:-

50% in Growth Fund
50% in Singapore Equities Fund

I decided on this allocation as the stock market is at a low. What is your opinion of this allocation?

Reply: It is okay.

(2) I am not sure about how the fund works. When you say that investors can expect a higher return (say, 5%) over a long period of say, 10 - 20 years, are you referring to the difference between the offer price I pay now, versus the bid price if I should sell at that time?

Reply: This is calculated based on bid to bid price. If you deduct the bid-offer spread, it will reduce the yield by about 3%. If you invest over 10 years, the yield will be reduced by 0.3% (i.e. 3% spread over 10 years). If you invest in the STI ETF, you incur a upfront cost of only 0.3% (instead of 3%).

(3) The Combined Fund is invested as follows, Equities 70%, bonds 30%). Does NTUC Income adjust these allocations based on their experience and how the market is performing, or do I have to monitor myself and do my own switching or balancing? My concern is that I may not know the market well enough to decide on the better allocation.

Reply: NTUC Income keeps the fund invested in the above proportion and does not change the allocation. It is best that you keep invested in the fund, and do not try to make switching beween the funds.