Mixed returns

THE Business Times compiled some numbers with the help of insurers to give a sense of how a conservatively-managed portfolio like a life insurer's participating fund would perform. Typically, these funds hold mostly bonds, with some equities in the mix. Generally, the five-year industry average return hovers at around 5-6 per cent a year. As can be seen, the bigger the fund size, the lower the returns. (see infographic)

Numbers vary hugely in between years. They might also be skewed upwards due to the inclusion of the recovery year of 2009 and not 2008, the year the global financial crisis hit.

This year, the projected figure set by the Life Insurance Association came down from 5.25 per cent to 4.75 per cent, due to the low interest rate environment. This marked the first adjustment in 11 years. The figure appears on the benefit illustrations used to sell whole life insurance policies. It generally tracks the average returns made by the industry over a period of time.