One in two CPF investors made money

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Actually with the stock market trending up this whole year, I think it'll be hard to lose money; but 49% of people actually lost money from CPF Investing! Undecided

Dec 30, 2010
One in two CPF investors made money

Good performance this year as global market sentiment improves
By Lorna Tan, Senior Correspondent

PEOPLE who invested their nest eggs in investments like stocks and unit trusts under the Central Provident Fund Investment Scheme (CPFIS) generally made a profit in the past year.

The CPF Board said yesterday that 51 per cent of total CPFIS-Ordinary Account investors who sold their Ordinary Account investments during the period made money, up from 48 per cent last year. The better performance for the 12 months to Sept 30 mirrors the improving sentiment in global share markets.

Stocks, especially in Asia, bounced back strongly, particularly during the three months to Sept 30.

The MSCI World Index jumped 7.3 per cent over that period, although returns for the first nine months this year were at minus 3.5 per cent.

Data from fund research firm Lipper shows that CPFIS-included unit trusts shot up 8.8 per cent while investment-linked insurance plans (ILPs) soared 7.9 per cent in the third quarter. Equity funds made the highest returns for both unit trusts and ILPs.

On closer analysis, the CPF Board report indicated that for the year to Sept 30, about 124,800 members, or 14 per cent of the total CPFIS-Ordinary Account investors, made net realised profits in excess of the Ordinary Account interest rate of 2.5 per cent.

The equivalent figure from last year was 112,600 members.

Most investors turned cautious amid fears of a double-dip recession and pulled back from investing their retirement savings.

As at Sept 30, the total amount invested under the CPFIS-Ordinary Account was $25.4 billion - down from $26.4 billion a year ago - while $7.3 billion was pumped into the CPFIS-Special Account. The level last year was $7.5 billion.

Investment products such as insurance, unit trusts, shares and bonds saw an outflow of funds.

The amount invested in insurance products fell by about $593.7 million to $16.2 billion under the CPFIS-Ordinary Account for the year to Sept 30, while funds in the CPFIS-Special Account declined by $180.2 million to $5.86 billion.

Cash in unit trusts under the CPFIS-Ordinary Account fell by about $186.6 million to $4.57 billion, while the amount in the CPFIS-Special Account slipped $75 million to $1.42 billion.

Engineer Richard Lee, 45, was disappointed at the falling number of unit trusts in the CPFIS due to the stricter investment criteria that these funds will have to meet in the new year. By Jan 1, funds on the CPFIS menu must comply with all four criteria put in place in 2006. They are: lower expense ratios; a 3 per cent cap on sales charges; a three-year track record; and a top-quartile performance ranking among their global peers.

But there was an increase in the amount invested under the CPFIS-Ordinary Account in property funds - up $4.9 million to $141.4 million - and gold, by $1.8 million to $16 million.

A CPF Board spokesman said: 'The majority of property funds, as well as gold products from United Overseas Bank and SPDR gold shares, saw an increase in CPF monies invested.'

The number of CPF members investing in insurance, unit trusts, shares, bonds, exchange-traded funds and property funds dipped from last year. The exception was gold, which saw an increase of about 200 CPF members, up 9.1 per cent from last year.

The chief executive of Grandtag Financial Consultancy, Mr Ben Fok, said investors prefer gold as they see it as a good asset class to hedge against inflation.

Financial experts said that although the fears of a double-dip recession are now reduced, uncertainty and volatility are expected in the year ahead.

'It is difficult to time the market, so investing regularly through dollar cost averaging is one of the best ways to manage volatility,' said Mr Fok.

For investment under the CPFIS-Ordinary Account, CPF members must have more than $20,000 in their Ordinary Account and/or more than $40,000 in their Special Account for investment under the CPFIS-Special Account.

My Value Investing Blog:
what more surprising is only 14% of investor actually made more than the 2.5% interest p.a..

(30-12-2010, 07:32 AM)aspeed Wrote: what more surprising is only 14% of investor actually made more than the 2.5% interest p.a..

To be fair, the article did say "net realised gain". There could be more sitting on unrealised gains.

I think the more sobering statistic is the amount of funds poured into Property and Gold funds...

On another note, anybody know what proportion of CPF holders have their monies invested?

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