CPFIS funds up over two straight quarters

CPFIS funds grew an average 14.52 per cent in the three years to Sept 30.
CPFIS funds grew an average 14.52 per cent in the three years to Sept 30.ST PHOTO: JAMIE KOH

Funds rise 6.22% in Q3, but outlook uncertain in months ahead after US polls and on concerns of Fed rate hike

Funds eligible under the Central Provident Fund Investment Scheme (CPFIS) rose 6.22 per cent on average in the three months to Sept 30, the second straight quarter in the black after a run of losses.

Unit trusts in the scheme rose 6.96 per cent, while investment- linked insurance products (ILPs) increased 5.75 per cent, according to research firm Thomson Reuters Lipper yesterday.

Among CPFIS-included funds, equities posted positive returns of 8.01 per cent, while bonds rose 1.24 per cent. Mixed-asset funds added 4.76 per cent, but money market funds managed only a gain of 0.16 per cent.

During the same period, the MSCI AC Asia ex-Japan index soared 11.69 per cent, while the Citigroup WGBI was up 1.6 per cent.

Mr Xav Feng, Thomson Reuters Lipper's head of Asia-Pacific research, said: "CPFIS funds experienced robust performance in the third quarter of 2016."

He noted that global equity markets have rebounded after the United States presidential election but much uncertainty is expected in the months ahead.

"The market remains anxious about a potential interest rate hike by the US Federal Reserve as the President-elect develops plans for increasing infrastructure spending to spur economic growth," said Mr Feng. "Moreover, speculation surrounds US and Asia relations in the light of Mr Trump's 'America First' policy, which needs more time for evaluation."

Furthermore, the globalisation of the yuan remains a key theme in the foreign exchange market.

"Investors are advised to keep a vigilant watch on potential risks and stay abreast of economic and geopolitical developments globally," Mr Feng added.

The performance is better on a longer-term perspective.

CPFIS-included funds reported a growth of 14.52 per cent on average in the three years to Sept 30, a gain of 15.62 per cent from unit trusts and 13.95 per cent from ILPs.

Equities were the lead gainer, with a growth of 15.7 per cent, while the money market portfolio was up 1.33 per cent on average.

During the same period, the MSCI AC Asia ex-Japan Index surged 21.39 per cent and the Citigroup WGBI TR went up 14.57 per cent.

A version of this article appeared in the print edition of The Straits Times on November 25, 2016, with the headline 'CPFIS funds up over two straight quarters'. Print Edition | Subscribe