Aug 25, 2010
By Francis Chan
KNOCK-ON effects from weakening global equities markets continued to plague funds held in the Central Provident Fund Investment Scheme (CPFIS) in the second quarter.
Unit trusts and investment-linked insurance plans (ILP) included under the scheme suffered an average overall loss of 6.55 per cent in the three months to June 30, according to funds tracker Lipper.
More specifically, CPFIS-included unit trusts slid 7.27 per cent and ILPs sank by 5.89 per cent amid 'downward-trending global equities', said Mr Rajeev Baddepudi, senior research analyst for Asean at Lipper.
'As the second quarter of 2010 progressed, we saw the optimism of the first quarter replaced by persisting concerns over the stability of the euro zone and by plunging investor and consumer confidence,' he said.
The best performing asset class among CPFIS-included unit trusts during the same period turned out to be bond funds, which gained 0.9 per cent on average.
That may sound like a meagre return, but it compares favourably with mixed asset and equity port-folios, which recorded losses of 5.09 per cent and 8.63 per cent respectively over the same quarter.
ILP portfolios were mainly flat but money market and bond offerings did slightly better gaining 0.08 per cent and 1.42 per cent respectively. However, equity and mixed asset offerings posted losses of 8.23 per cent and 4.2 per cent on average.
Despite the lacklustre performance, CPFIS funds did better than global benchmark indices during the same period. For instance, the MSCI World Index dropped 12.6 per cent in the second quarter.
As of December last year, the total regrossed balances of CPF - the sum of net CPF balances and net amount withdrawn for housing, investment and education purposes - stood at $304 billion.
About 9 per cent, or $31 billion have been withdrawn and invested.
There were 334 CPFIS-included funds, comprising 156 unit trusts and 178 ILPs, as of June this year.
From Straits Times published on Wed Aug 25, 2010
