Investors with a low risk-return appetite can consider Shubh Invest. However, those who want an aggressive play can look for other options
MAX New York Life Shubh Invest is a vanilla type II unit-linked insurance plan, focusing on the first-time investors. Shubh Invest is a very simple clearly defined plan leaving not many loopholes for a raw investor to get entangled. It offers inbuilt critical illness insurance as well. Investment options (funds) are also limited to only two dynamic allocations and balanced fund.
COST STRUCTURE:
The premium allocation charge of Shubh Invest is in line with most other products in the market. However, the policy administration charges seem a little high. It starts with 4% of the premium, but an annual inflation of 5% raise this to almost 8% by the end of the 15 year policy term. The inbuilt critical illness rider is not charged separately in the product.
BENEFITS:
Shubh Invest's low-premium appears to be a bigger advantage to investors. One can buy this plan at an annual investment of 15,000. Most of the other similar plans available in the market have much higher premium base. The inbuilt critical illness rider is an added advantage. Though, the number of diseases that are covered is only 10, it offers 50% of the sum assured in the case the policyholder is diagnosed of any of these diseases, without ceasing death benefit cover.
PERFORMANCE
Shubh Invest aims at offering balanced investment option to the investor. Both dynamic fund and balanced fund invest in equity shares and fixed-return investments to seek the best of both worlds. Dynamic fund is basically a combination of growth super fund, which is primarily an equity fund, and secure fund, which is pure debt fund. Depending on the age and risk return appetite of investors, the fund invests in these high and low risk fund.
For instance, if a 25-year old invests in it, a high proportion of fund will be invested in growth super fund, this will reduce as the person grows old and his risk taking capacity reduces. This strategy is best for those who want to benefit from the stock market but don't have the stomach for volatility.
Performance of all the funds under Shubh Invest has been quite encouraging. All the funds have outperformed the benchmark. Growth super fund has really performed well. It has generated a 44% absolute return while S&P Nifty has given 20% return in the past three.
Balanced fund has also generated a 27% return compared to the 23% return of its benchmark, Crisil Composite Balanced Fund, in the past three years. This implies that an investment of 1,000 done in October 2007 would be 1,270 as of today. One can choose either of the balanced fund or dynamic fund as more or less they will generate similar returns in the long run.
PORTFOLIO REVIEW
MNYL Shubh Invest follows a balanced investment strategy. In case of equity, the portfolio is titled towards large caps. However, recently the company has relatively increased exposure in the mid-cap space. The top three sectors — financial services, oil and gas and technology — form almost 35% of the portfolio. Some highly profitable sectors such as healthcare and automobile have low presence in the portfolio.
An intersecting thing about the portfolio of Max New York life is its high cash holding, which may not be very rewarding for the company. Prior to the global meltdown, the churning of the portfolio was limited to about 10%, but post 2007-08, the company has been churning its equity portfolio by more than 100%.
DEATH / MATURITY BENEFITS:
Shubh Invest is a type II Ulip, which offers the twin advantage of both sum assured and fund value upon the death of the life assured. However, on maturity the policyholder receives only the amount accumulated in the fund. For instance, say a 35-year-old healthy male invest 24,000 per annum in dynamic fund for a period of 15 years. The sum assured will be 30 times the annual premium as prescribed in the plan. So, the total sum assured receivable, in case of any eventuality, would be 7.2 lakh. By the end of 15 years, assuming the rate of return of 6% and 10%, the fund value shall be 426,000 and 906,000, respectively, receivable at the maturity. However, in case of the demise of the policyholder, the nominee receives the sum assured of 7.2 lakh along with the existing fund value at that time.
OUR VIEW:
Shubh Invest is a good investment for a low-risk return appetite investor, willing to invest in Ulip for the first time. Even for those individual who by choice wants to make low investment, this is one of the few products that are available with only 15,000 yearly investment. However, the product has an upper limit of 24,000 for annual premium payment.
Those who are willing to invest in more aggressive funds need to look for other options.
