Central Provident Fund (CPF) members who invested in the CPF Investment Scheme (CPFIS) reaped average returns of 0.62 per cent in the second quarter ended June 30 this year.
This is according to fund research firm Thomson Reuters Lipper, which recently posted its findings on the performance of all CPFIS-included unit trusts and investment-linked insurance policies (ILPs).
In the three months ended June 30, unit trusts delivered a return of 0.64 per cent while ILPs rose 0.6 per cent. By asset class, equity funds averaged a return of 0.88 per cent, mixed asset funds rose 0.52 per cent and money market funds inched up 0.23 per cent. Bond funds fell 0.41 per cent.
During the same period, the MSCI All-Country Asia ex-Japan Index, a widely cited measure of Asian equities, fell 1.54 per cent while the FTSE World Government Bond Index went up 0.49 per cent.
Mr Xav Feng, head of Asia-Pacific research at Thomson Reuters Lipper, said: "Overall, CPFIS funds demonstrated good resilience during the second quarter of 2018. However, with the trade war between the US and China showing no signs of ceasing, trade tensions pose a great risk to global economic growth." His advice: "Investors should continue to monitor for further developments and potential volatility risk."
CPFIS-included funds achieved greater improvement over a longer investment horizon.
For the one-year period ended June 30, the overall performance of CPFIS funds posted a positive return of 5.29 per cent on average. Unit trusts rose 5.86 per cent on the year and ILPs rose 4.96 per cent.
Equity funds rose 7.19 per cent, outperforming bonds which fell 0.62 per cent. Mixed asset funds climbed 3.94 per cent and money market funds edged 0.76 per cent higher. During the same period, the benchmark MSCI All-Country Asia ex-Japan Index gained 9.13 per cent and the FTSE World Government Bond Index rose 0.91 per cent.
For the three-year period ended June this year, CPFIS-included funds grew 15.80 per cent on average, accounted for by a gain of 16.45 per cent from unit trusts and 15.45 per cent from ILPs.
Equities were the lead gainer with growth of 18.95 per cent, followed by mixed assets which rose 14.17 per cent. Bonds increased 6.21 per cent while money market funds grew 2.16 per cent.
During this period, the MSCI All-Country Asia ex-Japan Index rose 25.18 per cent and the FTSE World Government Bond Index gained 10.06 per cent.
The Government announced in March that it will lower the costs of investing in retirement funds under the CPFIS. Cuts to the sales charge and wrap fee under the CPFIS will be done in two phases.
On Oct 1, sales charges for new purchases of CPFIS products will be reduced to 1.5 per cent from 3 per cent. From Oct 1 next year, the sales charge will be removed entirely.
The cap on annual wrap fees will be lowered to 0.7 per cent on Oct 1, and to 0.4 per cent on Oct 1 next year. The latter covers advisory services and the costs of maintaining the account.
For this round of review, the total expense ratio remains at a maximum of 1.75 per cent per annum for funds that invest in equities.