The average one-year return of funds included in Singapore’s Central Provident Fund Investment Scheme underperformed global equity indexes despite achieving a positive return of 9.69%, according to a Morningstar report.
The CPF Investment Scheme allows account holders to invest a portion of their retirement plan assets into select funds approved by the Monetary Authority of Singapore. CPF had S$580 billion ($429.2 billion) in assets, of which S$32.2 billion was invested in the plan’s funds as of March.
CPFIS unit trusts performed marginally better at 9.71% compared with investment-linked insurance products, which returned 9.68%.
In comparison, the MSCI World one-year return as of June 30 was 20.36%, while the MSCI All Country Asia ex-Japan returned 13.05%. The funds also underperformed the FTSE All-World Index that returned 19.7% and the FTSE Asia ex-Japan Index that posted a 14% return.
“When compared against the likes of MSCI World which has delivered stronger returns, one should remember that it has an approximately 72% weighting in the United States,” Arvind Subramanian, Singapore-based senior analyst of manager research at Morningstar, said during a media briefing on Aug. 22.
“In reviewing the performance of CPFIS funds, it is worth noting that they cover a diverse range of categories with a relatively higher concentration of Asia-focused funds, reflecting investor demand. As a result, the significant performance divergence between Asian and global markets plays a part in influencing the average performance of CPFIS funds,” he added.
On a three-year cumulative basis, CPFIS funds returned -2.26% compared with the MSCI World index’s positive 23.02% return. However, they outperformed the MSCI AC Asia ex-Japan index that had a -15.65% return.
They also outperformed the FTSE World Government Bond Index, which had a -16.69% three-year cumulative return and a -0.49% one-year return.
