product launch |New regular savings product from CMI to cater for Eastern markets
Clerical Medical International is set to launch a regular savings product for the Hong Kong and Middle East market.
The Flexible Savings Plan is designed for investors - both local and expatriate - in Hong Kong and the Middle East.
It is a fixed-term unit-linked life assurance policy and investors can invest in a range of funds. These include guaranteed growth funds; currency reserve funds; bond funds; equity funds; managed funds; and index tracking funds. And external fund links are also currently being developed.
For the external funds, CMI is in the process of negotiating with Schroders, Mellon and UBS, and it is likely that these will be Hong Kong authorised funds.
Rod Macdonald, marketing manager at CMI, said: "According to research in the Hong Kong market, investors will invest in managed funds because of the risk associated with them. When the Cantonese feel confident, they tend to take risks more than others. We are also looking to develop other links such as multi-manager and hedge funds."
CMI controls about 70% of the single premium market in Hong Kong and the new product will be a natural extension to its range.
Macdonald said: "In Hong Kong, the regular savings market has grown 20% in the last couple of years, while the general investment market and the economy have been decreasing."
According to Macdonald, the product could be used as a vehicle for pensions savings, following the introduction of the Hong Kong compulsory pension scheme last December 2002. As part of this scheme, employees have to put 5% of their earnings into an account and the employer has to do the same. Fewer people in Hong Kong are relying on the traditional extended family for financial support when they retire.
It is also expensive for Hong Kong students to be educated at home and abroad and Macdonald says the product can be a useful tool for this purpose.
The Middle East market is a smaller one for CMI, but the regular savings plan will be extension to its existing products there. Investors in this country are already in tune with this market.
In both countries, the product will be targeted towards locals as well as expatriates and will be sold through intermediaries. Minimum investment starts at about £140 a month. Withdrawals can be made from the product. However, the units bought in the first two years have a surrender charge.
CMI is also thinking of extending its distribution to Malta and the Channel Islands.
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