The unit trusts and insurance-linked products (ILPs) of the Central Provident Fund Investment Scheme in Singapore (CPFIS) were badly down in the second quarter, says Standard & Poor’s, the official monitoring agent to the funds. The average equity unit trust and ILP lost 10.75 per cent and 10.09 per cent respectively, making their average 3-year return -16.98 per cent and -19.27 per cent.
The returns of asset allocation funds, which are funds that invest in a diverse range of investment products including equity, fixed income and money market securities, have suffered as well due to poor equity market performance around the world. Average returns for Q2 for CPFIS-included asset allocation unit trust and ILP are respectively -3.56 per cent and -5.12 per cent with their 3-year average return being -7.29 per cent and -6.94 per cent.
The only group of funds that have demonstrated strong performance in the past quarter is fixed income. Average return for fixed income funds in the unit trust universe is 2.81 per cent over the past quarter and 9.49 per cent over the past 3 years while for fixed income ILPs, average return is 3.30 percent in Q2 and 14.29 percent over the last 3 years. The money market ILPs included in the CPFIS have shown stable performance due to favourable currency movements in Asia, delivering -0.17 per cent in Q2 and 2.34 per cent over the last 3 years.
On the role of the Fund Performance Tracking Committee (FPTC) with regards to the monitoring of CPFIS investments, Mr. Lionel King, Co-Chairman, FPTC commented: “The FPTC, which comprises of members from the Life Insurance Association of Singapore (LIA), the Investment Management Association of Singapore (IMAS), and the Securities Investors Association of Singapore (SIAS), is pleased to play an active role in furthering consumer education in Singapore. We believe that Standard & Poor’s, as an internationally known organisation in the funds industry, will enable investors to make more informed investment decisions by making available easily accessible and up-to-date information on the funds’ performance.”
William Reidy, Managing Director – Asia/Pacific, Standard & Poor’s Investment Services, explained the role of his firm too. “Having worked closely with the investment community of Singapore for many years, Standard & Poor’s is indeed very excited with the opportunity to extend our relationship as the official performance tracking agency for CPFIS investments,” explains Reidy. “In addition to our efforts in Singapore, we also provide qualitative evaluation services to the Japan’s Postal Services Agency in Tokyo and conduct regular studies on the performance of the Mandatory Provident Funds in Hong Kong. For the Asia-Pacific, pension reform is the key strategic driver encouraging a greater and more effective focus on wealth management and financial planning by individual investors, their employers and their financial advisors. This trend has also created increased opportunities and challenges for the financial sector to deliver more diverse investment vehicles and, most importantly, to further educate the public about prudent investment strategies for the long term and their associated risks. At Standard & Poor’s, we have monitored these developments closely with the public and private sectors in an effort to bring greater visibility and transparency to the marketplace.”