By Gurdip Singh
SINGAPORE — The S$118.5 billion (US$72 billion) Central Provident Fund's move to limit funds for the CPF Investment Scheme to those in the top quartile among their global peers is unlikely to dismay managers.
The reason: While any funds added to the 400 already offered must meet the new criteria, no existing funds will be eliminated.
In fact, one manager called the move a good initiative, and said that over time it will help to enhance overall investment returns for CPF investors.
"These changes will help to encourage more CPF members to consider investing into well-managed funds, which will now also have lower expenses," said a spokesman at DBS Asset Management Ltd., a unit of Singapore's largest bank, DBS Bank Ltd. DBS is one of the 40 financial companies offering funds through the CPFIS.
"With the raising of the standard for inclusion … it will be more difficult for new funds to qualify, but having better quality funds will benefit investors over time," said the spokesman.
Other current managers, according to the CPF website, include ABN AMRO Asset Management (Singapore) Ltd., Capital International Research & Management Inc., Fidelity Investments (Singapore) Ltd., Prudential Asset Management (Singapore) Ltd., State Street Global Advisors Singapore Ltd., Templeton Asset Management Ltd. and UBS Global Asset Management (Singapore) Ltd.
Other managers contacted for the story declined to comment.
Financial industry observers pointed out that the fate of the funds that fall out of the new grouping would depend on the CPFIS investors' decision on where to put their money.
A CPF spokesman said funds may merge or terminate for a variety of reasons, but that will have to be decided by the product providers.
The changes to the CPFIS were effective Feb. 1.