Over-allocation into cash results in returns shortfall: Manulife

Singapore

IT'S one step forward, half-step back for savers in Singapore and most of Asia, who are striving to built up their nest egg.

A study by Manulife Asset Management has found that over-allocation into cash has resulted in portfolio returns being eaten up by the costs of savers' financial goals.

In Singapore the returns shortfall is 3.6 percentage points. That is, the annual cost growth is 5.8 per cent, but portfolio returns are a modest 2.7 per cent.

The picture is similar across Asia, except Japan. The estimated annual returns shortfall ranges between 0.3 percentage point in Taiwan and 6.6 percentage points in Indonesia. Only Japan had excess return after costs of 2.7 percentage points. This is because optimism over Abenomics spurred gains in the equity market over the past year, but this is not sustainable, said Manulife Asset Management ex…