Prudential Assurance Company Singapore

Prudential Assurance Company Singapore 

Investment Quarterly Report for 3 rd Quarter 2015 

November 2015 

Website Version

Content Page 

About Mercer ......................................................................................................................... 3 

Market Update ....................................................................................................................... 4 

Mercer Recommended Investment Strategy ......................................................................... 12 

Recommended Implemented Solution .................................................................................. 13 

Disclaimers ............................................................................................................................ 14

Mercer’s proposal for the Ministry of Finance – Accountant-General’s Department 

About Mercer 

Mercer Investments 

Mercer is a leading global provider of investment consulting services, and offers customised guidance at every stage 

of the investment decision, risk management and investment monitoring process. We have been dedicated to 

meeting the needs of clients for more than 35 years, and we work with the fiduciaries of pension funds, foundations, 

endowments and other investors in over 40 countries. We assist with every aspect of institutional investing (and retail 

portfolios in some geographies), from strategy, structure and implementation to ongoing portfolio management. We 

create value through our commitment to thought leadership; world-class, independent research; and top-notch 

consultants with local expertise. 

Mercer Investments has over 1,300 employees in 66 offices around the world. 

3


Market Update 

Asset Class 

Returns over 

last 3 months 

(%) 

Returns over 

last 12 

months (%) 

(As of 30 th Sept 2015) 

Ann. Returns 

over last 3 

years (%) 

Global Equity (MSCI World) -5.8 4.0 11.9 

Global Emerging Markets (MSCI Emerging Markets) -14.3 -9.9 -0.4 

Europe Equity (FTSE World Europe Index) -6.3 -1.6 7.9 

Asia ex. Japan Equity (MSCI Asia ex Japan) -15.1 -4.5 2.6 

Singapore Equity (STI) -19.0 -14.8 -3.0 

US Equity (S&P 500) -3.7 8.7 15.7 

Japan (Topix) -4.9 8.9 13.1 

China Equity (MSCI China) -17.0 3.4 6.0 

India Equity (MSCI India) -7.9 4.1 8.1 

Global Government Bond (Citi World Bond Index) 3.8 7.4 2.1 

Singapore Government Bond (UOB SG Govt Bond Index) 0.5 1.9 0.5 

Commodities (S&P GSCI) -6.1 -30.1 -14.4 

Data source: Bloomberg 

All returns are in SGD terms, in percentages, with dividends reinvested. 

The cut-off date for the prices is the last business day of the relevant quarter. 

Global Economic Comments 

There were few places for investors to hide in Q3, as a deterioration in risk appetite was accompanied by broadbased 

increases in correlations across the major asset classes. Although fears over Greece eventually subsided, the 

market narrative subsequently turned to the slowdown in China, the opacity of China’s policy responses, and the 

Fed’s apparent determination to proceed with lift-off. Along with the renewed decline in energy and other commodity 

prices, and growing doubts over forecasted US earnings growth, investors appeared to be re-assessing the 

sustainability of rich US earnings multiples and narrow credit spreads. We estimated that this re-assessment had 

culminated in a 60/40 portfolio of unhedged global equities and hedged global government bonds, giving US 

investors a return of -3.3% over the past year. 

Within risk markets, emerging market (“EM”) assets were the poorest performers in Q3. In local currency terms, the 

MSCI Emerging Markets index fell 12.0%, leading the index 8.0% lower over the year. In US Dollars, EM equities fell 

17.8% in the quarter, and 19.0% over the year. Emerging market debt (local currency) also returned -10.5% in the 

quarter, and -19.8% over the year, driven primarily by further weakness in exchange rates. 

Developed market (“DM”) equities also endured significant corrections. MSCI World fell by 7.6% in local currency 

terms, and by 8.3% in US Dollars. 

Fixed interest markets afforded little protection to investors. The benchmark 10-year government bond yields fell 

modestly in most major economies over the quarter, but the declines were largely isolated to sharp falls in inflation 

breakevens to post-crisis lows in many markets. In contrast, real yields in the US and in other developed economies 

drifted higher over the quarter, as the Fed continued to leave the door open to a September lift-off. Despite the return 

of risk-off sentiment, the net effect was a modest 1.8% return from global government bonds in the quarter, and a 

3.8% return over the year, in US Dollars. However, in other fixed interest markets, spreads widened in tandem with 

the weakness in equities markets, with investment grade credit subsequently returning just 0.3% and global high yield 

returning -3.6%, in US Dollars. 

The US Dollar major currency index jumped a further 4.6% over Q3, and had increased by 13.9% over the past year. 

However, the increase in Q3 was largely against higher yielding currencies, and the US Dollar had fallen modestly 

against both Euro and Yen. After some modest relief in Q2, energy and other commodity prices continued to fall in 

Q3. WTI crude oil prices plunged 24.2% in the quarter, briefly falling to below $US40/bbl in mid-August, while a wide 

4


range of other base metals prices also came under pressure. The S&P GSCI fell 19.3% in the quarter, and had fallen 

by 41.7% over the year, in US Dollars. 

Growth continued to diverge between the advanced and the emerging economies in 2015, holding up across most of 

the developed markets, but continuing to weaken in a range of emerging markets. Growth in China’s industrial 

economy slumped in Q2 to the lowest levels since the financial crisis, while the renewed declines in commodity 

prices and external funding problems pushed Brazil and Russia into even deeper recession. The slowdown in China, 

and fears of further Renminbi depreciation, also continued to ripple throughout Asia. Only India appeared to be 

largely insulated by way of a low US Dollar funding exposure, similar to that of eastern European economies. 

In contrast, GDP continued to grow at a moderate pace in the US, the Euro area and the UK, accompanied by further 

declines in unemployment. Japan’s cyclical upturn remained rather fragile and the country continued to struggle to 

overcome deflationary pressures. Slumping commodity export prices also hit growth in Canada, Australia and New 

Zealand. As with previous years, the second half again saw downward revisions to official and consensus forecasts, 

centered largely in the emerging world, but with some spillover into developed markets. The International Monetary 

Fund (IMF) revised down forecasted growth for 2015 and 2016 by 0.2% in both years, to 3.1% and 3.6% respectively. 

We view current risk-off sentiment partly as a market event, prompted by the end of quantitative easing in the US, the 

approach of interest rate normalization and the rise in the US Dollar. In our view, this shifting stance in US monetary 

policy and liquidity forced investors to re-assess the sustainability of spreads and equity valuations that had run 

ahead of increasingly challenged US corporate earnings fundamentals. In addition to the rise in the Dollar, excess 

global supply and the slowdown in China’s ‘old economy’ also contributed to the declines in commodity prices, and to 

pressures on USD-leveraged commodity producers. Inflation breakevens also continued to track energy and 

commodity prices lower. 

Against this backdrop, fears of a new ‘currency war’ and global recession, centered in China, appeared exaggerated, 

although we believe that the slowdown in EM has further to run, and that the risks to consensus DM forecasts 

remained tilted to the downside. In our view, changes to the Renminbi fixing arrangements should be viewed 

primarily as a further step in the liberalization of China’s financial markets and consistent with IMF demands. And 

while a greater role for market forces suggested the Renminbi might be biased to the downside, given the extent of 

domestic deleveraging and disinflation pressures, the authorities would be likely to continue intervening to avert more 

disorderly capital outflows. Rather, the new exchange rate peg appeared to have raised perceptions that the 

Renminbi would be a policy tool now, and that the direction of China’s currency would no longer be a one way bet. 

Indeed, the pattern of China’s overall growth in 2015 remained broadly consistent with policy objectives, and the 

pipeline of stimulus should ensure that the slowdown will remain manageable, notwithstanding rising concerns over 

co-ordination and implementation. Nevertheless, the slowdown will likely pose further challenges for EM, at a time 

when the strong US Dollar continues to suck away capital and curb the scope for more aggressive policy easing. The 

risks of contagion appeared lower than in previous episodes of EM capital flight, and growth in intra-regional trade 

accounted for much of the rising share of EM in global production, but in our view it would be imprudent to ignore the 

risk of further dampening on DM. Intensifying EM problems had already contributed to the tightening in global 

financial conditions, and (perhaps over-optimistically) consensus forecasts will continue to embody strong rebounds 

in EM growth in 2016. 

Chart 1 Chart 2 

In the United States, the strong Dollar was already compressing output, earnings and employment growth, and 

recent market volatility contributed to a further tightening in financial conditions. Net exports subtracted 0.6 

percentage points from GDP growth over the year to June 2015, after a broadly neutral contribution in each of the 

previous three years, with the weakness centered in the manufacturing sector. However, in the absence of further 

5


Dollar appreciation, this source of weakness should eventually ameliorate. In the meantime, moreover, private 

demand growth continued to broaden in the second half of 2015, and was expected to withstand the recent modest 

tightening in financial conditions. In addition to the continued strength in household income and balance sheet 

fundamentals, and the accompanying increases in consumer spending growth and residential construction activity, 

private fixed non-residential (business) investment continued to slowly recover. 

Business investments lagged the strong recoveries in corporate profits and margins throughout the current cycle, but 

remained close to cyclical highs in real terms during Q2. Although profit momentum slowed over the past year, 

growing skills shortages, pressure to maintain margins, and the prospect of rising interest rates were strong 

incentives for management to deploy more free cashflow into new capital expenditure. However, research and 

development (“R&D”) spending was at record highs as a proportion of GDP, while renewed capital deepening should 

also help eventually to revive US labour productivity growth. Ahead of this more ‘late cycle’ development, weak 

growth in output per worker and declining labour force participation suggested that the trend in US GDP growth may 

have sunk to below 2.0%, and below official Fed estimates. We remain cautious that consensus GDP growth 

forecasts, 2.5% in 2015 and 2.7% in 2016, underestimated these supply constraints. 

In the Euro area, immediate uncertainty around Greece subsided, which should allow moderate recovery, 

underpinned primarily by domestic demand, to continue through into 2016. In the core Eurozone area, German 

export growth appeared vulnerable to weakness in EM and the problems at Volkswagen, but domestic demand 

remained strong. Similarly, renewed stagnation in France was partly offset by relative strength in other parts of 

northern Europe. However, prospects remained brightest for the peripheral ‘program’ economies, where reforms and 

large gains in international competitiveness continued to spur strong cyclical upturns. Moreover, across the broader 

Euro area, bank lending standards continued to loosen through 2015, and which was reflected in a stirring in credit 

growth in the past quarter. Consensus forecasts proved resilient, and in our view forecast GDP growth of 1.7%, the 

expected strongest since 2011, appears achievable. 

Entering the second half of the year, growth also appeared to have moderated in the United Kingdom, with the 

weakening in manufacturing now spilling over into a range of service sectors. Despite improving growth in much of 

the Euro area, the UK manufacturing Purchasing Managers’ Index (“PMI”) slipped steadily through much of 2015, 

and largely reflected the rise in Sterling and an accompanying deterioration in international competitiveness. 

Consumption growth also appeared to have softened in Q3, which contributed to the UK services PMI slumping in 

September, to the lowest level since April 2013. Nevertheless, the slowdown in growth was expected to prove more 

of a ‘soft patch’ than a fundamental shift down, with the tight labour market and falling energy prices leading to a 

steady acceleration in real wage growth, and broadening house price gained a further support for household 

confidence. The consensus expects GDP growth of 2.5% in both 2015 and 2016, remained broadly unchanged in 

recent months. 


In contrast to this picture of steady and moderate growth across the US and Europe, Japan’s cyclical upturn 

appeared to be faltering, as 2015 unfolded. The strong 1.1% advance in GDP in Q1 was followed by a 0.3% 

contraction in Q2, and followed by further falls in manufacturing production and sentiment, and a moderation in 

employment growth. The earlier decline in the unemployment rate appeared also to have stalled. After recovering 

strongly in the first half of 2015, exports and machinery goods orders softened, while indicators of consumer 

spending suggested continued weak growth. Correspondingly, the consensus forecast for growth in 2015 was 

revised down from 1.0% to 0.7% over the past quarter, although GDP was still anticipated to expand by a relatively 

healthy 1.5% in 2016. 

China was firmly at the centre of the current global growth scare. While the fallout from the collapse in China’s equity 

markets was likely to be limited, growth in the ‘old’ industrial economy appeared to have slowed much more sharply 

than expected, intensifying the downward pressure on commodity, producer and export prices. Indeed, there 

6


appeared to have been some recent softening in China’s labour market, which had defied the broader slowdown in 

GDP growth until now. In the meantime, the reputation of China’s policymakers also took a hit. Facing the formidable 

task of absorbing debt and capacity overhangs, while also rebalancing and liberalizing the economy, the handling of 

the stock market bubble and Renminbi peg had clearly confused investors. There were growing concerns that the 

anti-corruption drive was hampering implementation of the reform agenda, while there were fears also that the 

Renminbi would potentially be a policy tool now. 

Notwithstanding the apparent emergence of domestic political tensions, our base case for China remained broadly 

intact. Although introducing a greater role for market forces, we expect the authorities to resist depreciation of the 

Renminbi in the short-term. While the slowdown in the ‘old economy’ was partly structural, and will persist over the 

remainder of the decade, there was still scope for traditional monetary and fiscal policies to help manage the 

adjustment. Amid this downturn in investment and export growth, moreover, consumption spending and service 

sector growth remained broadly steady. Consumption accounted for 60% of growth in China’s GDP over the year to 

June 2015, up from 54% a year earlier. 

The structural shift down in China’s growth continued to reverberate through other emerging economies, contributing 

to a further intensification of capital outflows. In 2015, the risks of a broad-based contagion appeared lower than in 

previous episodes of capital flight, reflecting the diminished role of banking systems in intermediating capital flows, 

generally sounder sovereign balance sheets, with Brazil being a major exception, and a range of ‘winners’ from lower 

energy prices and economic reform, most notably India and eastern Europe. However, a number of others remained 

at risk of joining Brazil and Russia in recession, including the likes of Turkey and South Africa, with relatively large 

current account deficits, troublesome inflation, corporate sectors exposed to rising US Dollar liabilities, and limited 

commitment to painful economic rebalancing. While real exchange rates fell significantly across much of EM, growth 

in DM continued to be driven more by services sectors, dampening the potential recovery in EM exports. More 

positively, given the steep currency declines already, scope could emerge in 2016 for more aggressive policy easing, 

and which would provide a substantial fillip for broader recovery prospects. 


Deepening downturns and Renminbi depreciation added to the global disinflationary impulse emanating from EM, 

exacerbated by the reluctance among many global commodities producers to shut in excess supply. Headline 

inflation appeared poised to fall back towards zero in most of the major developed economies, before rebounding as 

the earlier sharp fall in energy prices washed out, and which could still potentially temper the tentative moderate 

upturns in core inflation. This latest intensification of the major ‘transitory’ constraints on US inflation, and the recent 

return of financial market volatility, clearly stayed the Fed’s hand in September, and also increased uncertainty over 

the timing of lift-off in the UK. Perhaps, of greater surprise was the dovish commentary and guidance accompanying 

the Fed’s decision to leave the funds rate unchanged. 

The commencement of US interest rate normalization before the end of the year still remains a possibility. Some on 

the Federal Open Market Committee (“FOMC”) were clearly concerned over the extent to which the prolonged period 

of negative real borrowing rates may be encouraging excessive risk-taking and leverage. Moreover, there were good 

reasons to believe that the recent market volatility may reflect as much the Fed telegraphing its desire to lift interest 

rates, as to the slowdown in growth in China and EM. Indeed, the devaluation of the Renminbi coincided with the 

increasing disinflationary discomfort to China from the strengthening US Dollar. In the event where near-term data 

were to confirm that EM problems are unlikely to have a significant adverse impact on US GDP growth, it might not 

fully alleviate market volatility, but would remove one major hurdle for a 2015 lift-off. Against such a backdrop, we 

would expect Bank of England (“BoE”) to follow Fed early in 2016. 

7


Although deferral of lift-off suggested a potential risk of larger interest rate increases further down the track, we 

continue to expect a rather shallow tightening trajectory, somewhere between current market pricing and the 

September FOMC ‘dots’. A gradual profile seemed warranted in the face of lingering uncertainties over both the 

extent of labour market slack and the rate of potential US GDP growth, as well as the persistence of ‘transitory’ 

factors tempering US inflation. Stubbornly weak US wage growth suggested that both Non-Accelerating Inflation Rate 

of Unemployment (“NAIRU”) and trend GDP growth may be lower than currently estimated by Fed, which would 

undermine the prospect of inflation returning to 2% over the next 2-3 years, while also suggesting a lower terminal 

funds rate. 

Moreover, there was at least an equal risk that the persistence of ‘transitory’ factors may actually reflect the depth of 

secular global disinflationary pressures. In such circumstances, a poorly calibrated pre-emptive tightening would 

amount to a policy mistake, and presumably amplifing those disinflationary pressures through further rises in the US 

Dollar and market volatility. Finally, circling back to the US labour market, in addition to the level of NAIRU, there was 

also considerable uncertainty over the short-run trade-off between unemployment and inflation expectations, i.e. the 

shape of the Phillips Curve. Despite evidence of a less flexible US labour market, wage growth and inflation 

expectations proved remarkably stable through the full cycle of a rising and falling unemployment rate, suggesting a 

flatter curve and looser relationship than in the past. 

In contrast to the US and the UK, both the European Central Bank (“ECB”) and Bank of Japan (“BoJ”) appeared open 

to the possibility of enlarging current asset purchase programs. Further balance sheet expansion could also help 

alleviate pressure on EM exchange rates as the Fed lifts rates, allowing more aggressive easing in EM monetary 

policy. In our view, deeper interest rate cuts would be required before taking a more constructive view on EM assets. 

8


Market Review 

(All returns are in Local Currency terms, unless otherwise stated) 

Pressure from the second quarter of 2015 showed little signs of abating in the third quarter, resulting in a broad selloff 

in risky assets. A growing sense of uncertainty prevalent among market participants was reflected in the spike in 

market volatility. In August 2015, intraday equity market volatility rose to levels that had not been seen since the 

global financial crisis. 

The sell-off off in risky assets was largely attributed to a surprise devaluation of the Chinese Yuan in August 2015. 

Against the backdrop of diverging monetary policies globally, the ongoing commodity price slump and the broad 

weakness in emerging markets assets, the latest shift in China’s foreign exchange policy sparked fears that China is 

increasingly prepared to export deep domestic disinflationary pressures abroad. This triggered an extension of the 

sell-off in risky assets that had begun at the end of June 2015. Commodity prices and emerging markets equities 

suffered the most in the face of slowing Chinese growth and a strong US Dollar. 

In the United States, the Federal Reserve Bank (“Fed”) chose to leave interest rates unchanged in its September 

meeting, citing concerns over recent global economic and financial weakness. While Consensus Economics still 

expected the world’s largest economy to grow at 2.4% this year, deflation remained a concern as the seasonally 

adjusted year-over-year change of US consumer prices declined to -0.1% in August largely due to the ongoing 

weakness in oil prices. 

In Europe, a provisional agreement for a third bailout was reached between Greece and its creditors in mid-July. 

Greece remained in the Eurozone and fears over risks of contagion were diminished. The Eurozone economy 

continued to improve tepidly, with seasonally adjusted GDP growth of 0.4% in the second quarter of 2015. 

Macroeconomic policies in Europe and in Japan remained very supportive, in contrast with the Fed and the Bank of 

England which had been slowly preparing for initial rate hikes. 

All major equity markets posted negative returns in the third quarter of 2015. Global equities saw a decline of 7.6% 

over the quarter. In Asia, the MSCI AC Asia ex-Japan Index, and in Japan, the Topix Index, yielded negative returns 

of 13.8% and 12.8% respectively. The poor performance of Japanese equities followed the release of mixed 

economic data which showed Japan falling into deflation in August 2015 for the first time since April 2013 in spite of 

the improving consumer spending and corporate earnings. Equities in the Emerging Markets also posted 

disappointing performance at -12.0%. 

9


Figure 1: Market indices 1 year ending 30 th Sep 2015 (in Singapore dollar terms, normalised to 100 at 3 Oct 2014) 

130 

120 

110 

100 

90 

MSCI World 

MSCI Asia ex Japan 

STI 

80 

S&P500 

Global Government Bonds 

Singapore Bonds 

70 

10/14 11/14 12/14 1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15 

Figure 2: 10-Year Government Bond Yield (in local currency) 

4.0 

Last Quarter 

Current 

3.0 

2.7 

2.5 

2.4 

2.0 

2.0 

1.0 

1.2 

1.1 

0.5 

0.4 

- 

Singapore US Japan Germany 

Bonds generally posted positive returns, with the exception of inflation-linked bonds and Asian bonds. Global bonds 

yielded a return of 1.9%, in local currency terms. 

10

WTI Cushing Crude Oil (US$/bbl) 

Gold (US$/oz) 


Figure 3: SGD against major currencies 

Spot Rates Current Last Q 

USD 

JPY 

2.0 

5.6 

7.9 

11.5 

SGD/USD 1.4225 1.3474 

SGD/100xJPY 1.1865 1.0999 

SGD/AUD 0.9981 1.0385 

SGD/EUR 1.5896 1.5018 

SGD/GBP 2.1520 2.1176 

-10.5 

-3.9 

AUD 

-1.3 

EUR 

5.8 

12-month return 

3-month return 

GBP 

1.6 

4.1 

-15 -10 -5 0 5 10 15 

The Singapore Dollar appreciated against the Australian Dollar by 3.9%. However, it depreciated against the 

Japanese Yen by 7.9%, the Euro by 5.8%, the US Dollar by 5.6%, and the Pound Sterling by 1.6%. 

Figure 4: Gold and Crude Oil Returns 

100 

1350 

90 

1300 

80 

1250 

70 

1200 

60 

1150 

50 

1100 

40 

1050 

30 

10/14 

11/14 

12/14 

1/15 

Gold (Spot) 

2/15 

3/15 

4/15 

WTI Crude Oil 

5/15 

6/15 

7/15 

7/15 

8/15 

1000 

9/15 

11


Mercer Recommended Investment Strategy 

4% 

5% 

6% 

10% 

75% 

Global Equity EM Equity Singapore Equity Global Bonds 

Lower Risk 

Singapore Bond 75% 

Global Bond 4% 

Global Equity 6% 

Singapore Equity 5% 

Asian Equity 10% 

Investors with this risk profile are mainly concerned with 

capital stability. They are prepared to accept only a minimal 

level of volatility. Overall returns are expected to be low 

relative to the other risk profiles. 

Investment Strategy expected volatility*: 4.9% p.a. 

Probability of loss over any 10-year period: 0.1% 

66% probability of generating returns of 4.4% p.a. or above** 



Singapore Bonds Corporate Bonds Asian Equity 

4% 

60% 

10% 

5% 

6% 

15% 


Low to Medium Risk 




EM Equity 5% 



Investors are chiefly concerned with achieving stable 

returns, particularly of capital returns. They are willing to 

accept a modest level of volatility to achieve these returns. 







4% 

20% 

Medium to High Risk 



Investors within this risk profile aim to achieve capital growth 

over the medium to long-term. They are prepared to accept 

higher volatility than Low to Medium risk profile to achieve 

this return. 

10% 

6% 

15% 

45% 


EM Equity 10% 









Higher Risk 

25% 

6% Singapore Bond 30% 


15% Global Equity 

EM Equity 

6% 

15% 

Singapore Equity 

30% 

20% 


20% 

4% 


Investors with this risk profile seek high growth over the 

long-term. They are willing to accept a high level of volatility 

to achieve this so are not concerned about capital stability 

from year to year. 








* The “Investment Strategy expected volatility” is, assuming a normal distribution, the standard deviation of the statistical distribution of returns, which are generated based on 

Mercer’s 20-year Capital Market Assumption (“CMAs”). Volatility refers to the amount of uncertainty or risk about the size of changes in an investment’s value. A higher volatility 

means that an investment’s value can potentially be spread out over a larger range of values. 

** Based on annualised returns over any 20-year period 

Mercer recommended investment strategy is a set of suggested allocations to asset classes that is generated using Mercer 20-year Capital Market Assumptions (“CMAs”). All 

risks and returns projections in this section are statistical in nature, using Mercer CMAs for the underlying asset classes allocated in this strategy, without considering any 

investment cost. Investors, implementing this strategy using appropriate Collective Investment Scheme (“CIS”) products as indicated below, are subjected to associated 

investment costs, and may or may not experience risks and returns as projected by Mercer here, which have been derived using Mercer’s CMAs. Actual return and risks 

experienced by investors is dependent on the combined performances of these allocated CISs. 

12


Recommended Implemented Solution 

5% 

10% 

10% Lower Risk 

PRUlink singapore dynamic bond fund 75% 

PRUlink singapore growth fund 5% 

PRUlink global managed fund 10% 

PRUlink asian equity fund 10% 

75% 

15% Low to Medium Risk 


10% 

5% 

10% 

60% 


PRUlink emerging markets fund 5% 



15% Medium to High Risk 

10% 

10% 

45% 






20% 

25% Higher Risk 

30% 




10% 



15% 

20% 

Performance of Implemented Solution 

Model Portfolio 

Lower Risk 

Low to Medium Risk 

Medium to High Risk 

Higher Risk 

Last 3 months 

Returns (%) 

-2.0 

-4.0 

-5.9 

-7.9 

Last 6 months 

Returns (%) 

-3.3 

-5.6 

-8.1 

-10.7 

Last 12 months Since Inception 

Returns (%) Returns (% p.a.) 

1.6 

2.5 

-0.9 

2.0 

-2.3 

1.7 

-5.3 1.0 

13


Disclaimers 

Important notices 

© 2015 Mercer LLC. All rights reserved. 

This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to 

whom it was provided by Mercer. Its content may not be modified, sold or otherwise provided, in whole or in part, to 

any other person or entity, without Mercer’s written permission. 

The findings, ratings and/or opinions expressed herein are the intellectual property of Mercer and are subject to 

change without notice. They are not intended to convey any guarantees as to the future performance of the 

investment products, asset classes or capital markets discussed. Past performance does not guarantee future 

results. 

This does not contain investment advice relating to your particular circumstances. No investment decision should be 

made based on this information without first obtaining appropriate professional advice and considering your 

circumstances. 

Information contained herein has been obtained from a range of third party sources. While the information is believed 

to be reliable, Mercer has not sought to verify it. As such, Mercer makes no representations or warranties as to the 

accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential or 

incidental damages), for any error, omission or inaccuracy in the data supplied by any third party. 

This does not constitute an offer or a solicitation of an offer to buy or sell securities, commodities and/or any other 

financial instruments or products. 

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representative. 

Mercer manager universes are constructed using data and information provided to Mercer either directly or via third 

party providers. The universes are intended to provide collective samples of strategies that best allow for robust peer 

group comparisons to be conducted over a chosen timeframe. Mercer does not assert that the peer groups are 

wholly representative of and applicable to all strategies available to individual investors. Universe distributions are 

calculated based on the data that was in the Manager’s database at the time that the universe was constructed, and 

may therefore change over time due to additional information supplied by an investment manager or revisions to 

data. 

The value of your investments can go down as well as up, and you may not get back the amount you have invested. 

Investments denominated in a foreign currency will fluctuate with the value of the currency. Certain investments carry 

additional risks that should be considered before choosing an investment manager or making an investment decision. 

The model portfolios provided herein are investment strategies designed and constructed by Mercer for reference 

and general information only with respect to the allocation rates to each fund in order to replicate an investment 

strategy that matches certain risk category and appetite of Investors. They are not investment products nor constitute 

a collective investment scheme as defined under the Financial Advisers Act or any other relevant regulations in 

Singapore. The Portfolio Solutions and any relevant investment products are offered, distributed and marketed solely 

by Prudential, and Mercer is not in any way offering any financial advice to you in relation thereto. 

14

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