Funds in CPF Investment Scheme gave negative returns of 3.26% in Q1

 Central Provident Fund building in Tampines Central.
Central Provident Fund building in Tampines Central.PHOTO: ST FILE

SINGAPORE - Investors with money in funds under the Central Provident Fund Investment Scheme (CPFIS) did poorly last quarter.

Researcher Lipper, which monitors the performance of all CPFIS funds, said the overall performance of the funds slid by 3.26 per cent for the three months ended March 31.

Unit trusts in the scheme delivered a negative return of 3.8 per cent while investment-linked insurance products (ILPs) fell 2.9 per cent. Except for CPFIS-included bond and money market funds, which posted positive returns of 2.53 per cent and 0.22 per cent, funds in the other asset types in the equity and mixed-assets categories fell 5.02 per cent and 1.89 per cent.

Mr Xav Feng, head of Asia Pacific Research, Thomson Reuters Lipper, said that this year kicked off with a volatile start, with risk markets experiencing sharp drawdowns to mid February, followed by a strong rally.

"Market expectations of US Federal Reserve's monetary policy have became more sensitive due to speculation over faltering global growth and mixed US economic data. China's growth slowdown continues to impact global financial markets, as evidenced in falling imports and exports.

"Seesawing commodity prices, Bank of Japan's negative interest monetary policy and whether European Central Bank's quantitative easing has reached its limit of effectiveness all contribute to an uncertain economic outlook."

In light of continued market volatility, Mr Feng advised investors to remain cautious but added that opportunities may arise.

The overall performance of the CPFIS was consistent with the trend in the global markets. The MSCI AC Asia ex-Japan Index fell 3.36 per cent, while the Citigroup World Government Bond Index (WGBI) was up 1.65 per cent for the quarter.

For the 12-month period ended March 31, CPFIS-included funds posted a negative return of 7.98 per cent on average.

However, taking a longer horizon, the overall performance was better in the three-year period to March 31. CPFIS-included funds reported strong growth of 9.92 per cent on average, accounted for by a gain of 10.59 per cent from unit trusts and 9.54 per cent from ILPs.

During the same period, the MSCI AC Asia ex-Japan Index soared 9.8 per cent and the Citigroup WGBI rose 10.15 per cent. Equity-type funds were the leading gainers with growth of 11.43 per cent, followed by the money market portfolio which posted about 1.28 per cent gains on average.

lornatan@sph.com.sg