CPF Investment Scheme funds up average of 2.7% in Q3

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

CPFIS-included unit trusts rose 3.06 per cent in the period while investment-linked insurance products (ILPs) increased 2.49 per cent, said research firm Thomson Reuters Lipper yesterday.

Equities posted a positive return of 3.5 per cent for all CPFIS-included funds, while mixed-asset added 2.23 per cent, bonds rose 0.33 per cent and money market funds grew 0.15 per cent.

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 the Citigroup World Government Bond Index (WGBI), a measure of bond returns, rose 0.42 per cent.

Yields were rosier for the 12 months to Sept 30, with CPFIS-included funds delivering an average return of 13.14 per cent, with unit trusts up 14.76 per cent and ILPs ahead 12.19 per cent.

In the same period, the MSCI AC Asia ex-Japan Index soared 22.53 per cent while the Citigroup WGBI fell 3.08 per cent.

Equities were up on average 17.57 per cent in the year, outperforming bonds at 0.08 per cent, mixed-asset at 10.13 per cent and money market funds, which inched up 0.57 per cent.

CPFIS-linked funds did better when viewed over the longer term. Their performance for the three years to Sept 30 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.

By comparison, MSCI AC Asia ex-Japan Index rallied 34.86 per cent in this three-year period and Citigroup WGBI rose 9.32 per cent.

Mr Xav Feng, head of Asia-Pacific research for Thomson Reuters Lipper, sounded a note of caution: "Current volatility remains low but headwinds are expected... Tax reform (in the United States) remains the centrepiece subject leading to investor optimism, but caution is still seen from large financial institutions. In China, President Xi Jinping outlined his 'China Dream' of renewed national wealth...

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

A version of this article appeared in the print edition of The Straits Times on November 30, 2017, with the headline 'CPF Investment Scheme funds up average of 2.7% in Q3'. Print Edition | Subscribe