New rules that kicked in at the start of the year have "put the squeeze" on fund managers under the Central Provident Fund Investment Scheme (CPFIS) but few of them have withdrawn from the scheme altogether, an industry body said yesterday.

To help CPFIS investors achieve better net returns, the CPF Board has, since 2006, progressively lowered the cost of investing by setting caps on sales charges, funds' total expense ratio and wrap fees.

In September 2014, the CPF Board placed a lower cap on the total expense ratio for unit trusts and investment-linked insurance products under the CPFIS.

The total expense ratio refers to the percentage of a fund's assets needed to pay for its operating costs, such as management, trustee and audit fees.

Investment managers wanting to offer CPFIS products after September 2014 had to abide by the new expense ratios immediately, but those who already had products under the scheme had until the start of this year to comply.

"CPF is trying to bring down the cost of investment for investors and we support that - cost has been a big issue. They've just gone through the second round of reducing those, which has put the squeeze on managers," said Investment Management Association of Singapore (Imas) chairman Nicholas Hadow.

"So some managers, anecdotally, decided - maybe they had one or two funds - to come out of it. Others decided to stay in."

There are more than 130 investment-linked products and 90 unit trusts included in the CPFIS. These include equity funds, bond funds and mixed asset funds which cover major geographical regions.

Imas executive director Michael Lim said that of the association's more than 100 investment managers, only about 30 per cent offer products under the CPFIS.

"Lately there may have been a few that have left (the CPFIS) and I think that could be a reaction to the new expense ratio, but I think that's also quite cyclical in the sense that we don't see that many funds leaving," he said.

"There are also one or two coming in."

Yasmine Yahya