PH unit of Manulife puts up Asean Growth Fund

MANULIFE Philippines will tap other markets in Southeast Asia for its investment activities, saying the move is expected to boost earning opportunities for its policyholders.

In a statement, Manulife said it had launched the “Asean Growth Fund,” a pool of investors’ money that would be be used to purchase portfolio instruments from about a thousand companies across the region with individual capitalization of $100 million to $3 billion.

Indren Naidoo, president and chief executive officer of Manulife, said the company has high hopes of generating significant income from the fund, citing the favorable economic growth performance of Southeast Asian countries vis-à-vis advanced economies in the West.

“The Asean Growth Fund offers exposure to fast-growing Asean economies, which have roughly doubled their aggregate GDP (gross domestic product) over the past five years to reach about $2 trillion for 2012,” he said.

“The fund enables clients to invest directly in the strengthening economies of Southeast Asian countries without the need to maintain offshore investment accounts,” Naidoo added.

The fund will be composed of money put in by holders of investment-linked insurance policies. Unlike regular insurance products, investment-linked policies contain features that allow holders to generate yields from portfolio investments.

Manulife, which claims to be one of the top five players in the Philippine insurance industry in terms of premium collection, anchors its optimism on projections by several institutions that Southeast Asia will remain a key growth driver of the global economy over the medium term.

It cited projections by the International Monetary Fund that countries from Southeast Asia would post an average growth of 5.8 percent next year, higher than the global average of only 3.6 percent.

The decision of Manulife to tap more markets in the region for its investment requirements come amid the low interest rate environment worldwide. The company believes that investing in diverse assets from a wide array of well-performing economies will help generate higher yields.

Southeast Asia is a preferred investment site given that interest rates in the region remained higher than those in advanced economies despite the global economic crisis.

In the Philippines, for instance, the central bank’s key policy rate, which influences commercial interest rates, stands at 3.5 percent. This is a historic low, but is still much higher than the near-zero interest rate of the US Federal Reserve.

Manulife cited the favorable performance of the stock markets of the Philippines and Thailand, the indices of which have grown by about 25 percent since the start of the year.