CPF Investment Scheme funds up average of 2.7% in Q3

People walking past the CPF building on Robinson Road.
People walking past the CPF building on Robinson Road. PHOTO: ST FILE

SINGAPORE - CPF members who invested in funds that are part of the Central Provident Fund Investment Scheme (CPFIS) reaped average returns of 2.7 per cent in the three months to Sept 30.

During the same period, CPFIS-included unit trusts rose 3.06 per cent, while investment-linked insurance products (ILPs) increased 2.49 per cent, according to fund research firm Thomson Reuters Lipper on Wednesday (Nov 29).

For all CPFIS-included funds, equities posted positive returns of 3.50 per cent, mixed-asset added 2.23 per cent, while bonds and money market funds grew 0.33 per cent and 0.15 per cent respectively.

In comparison, the MSCI AC Asia ex-Japan index, a widely cited measure of Asian equities, rallied 5.28 per cent in the same period while a measure of bond returns, the Citigroup World Government Bond Index rose 0.42 per cent.

For the year to Sept 30, CPFIS funds delivered an average return of 13.14 per cent, with unit trusts up 14.76 per cent and ILPs rising 12.19 per cent. Meanwhile, the MSCI AC Asia ex Japan Index soared 22.53 per cent while the Citigroup WGBI TR fell 3.08 per cent. For the one-year period, on average, equities (+17.57 per cent) outperformed bond offerings (+0.08 per cent), mixed-asset (+10.13 per cent) and money market funds (+0.57 per cent).

CPFIS-linked funds performed better when viewed over the longer term. Their performance for the three-year period ended September was up 19.25 per cent on average. Unit trusts soared 19.90 per cent over the same period while ILPs rallied 18.93 per cent. For comparison, during this period, MSCI AC Asia ex-Japan Index rallied 34.86 per cent and Citigroup WGBI TR rose 9.32 per cent. Equities were the lead gainer with growth of 23.30 per cent, while bonds posted 8.55 per cent returns on average.

Looking ahead, Xav Feng, head of Asia Pacific research for Thomson Reuters Lipper, sounded a note of caution:

"CPFIS funds experienced robust performance in the third quarter of 2017. Current volatility remains low but headwinds are expected by market participants around the world. In the US, Jerome Powell has been appointed as the chairman of the Federal Reserve. Tax reform remains the centre piece subject leading to investor optimism, but caution is still seen from large financial institutions. In China, after the 19th CPC National Congress, President Xi Jinping outlined his 'China Dream' of renewed national wealth and heralds a 'new era' of Chinese power.

"In light of these developments, investors are advised to stay on top of global geopolitical events and remain cautious."