Funds under CPF Investment Scheme post negative returns as volatility bites

Investors should be cautious, experts say.

Unit trusts and investment-linked insurance products that are included under the Central Provident Fund Investment Scheme (CPIS) posted negative returns in the first quarter, data from Thomson Reuters Lipper showed.

Funds included under the CPFIS posted negative returns of 3.26% on average. CPFIS-included unit trusts declined by 3.80% while investment-linked products fell 2.90%. Equities posted the biggest losses with negative returns of 5.02%, while bonds and money market funds posted positive returns of 2.53% and 0.22%.

During the same period, MSCI AC Asia ex-Japan index slid 3.36%, while Citigroup WGBI soared 1.65%.

“2016 kicked off with a volatile start, with risk markets experiencing sharp drawdowns to mid February, followed by a strong rally. Seesawing commodity prices, Bank of Japan’s negative interest monetary policy and whether European Central Bank’s quantitative easing has reached its limit of effectiveness all contribute to an uncertain economic outlook. In light of continued market volatility, investors are advised to remain cautious but opportunities may arise,” said Xav Feng, Head of Asia Pacific Research, Thomson Reuters Lipper.