FLOWS into Singapore-registered funds hit a record S$3.1 billion in the third quarter, up from S$1.8 billion in the quarter before – as CPFIS funds clocked their best one-year average returns since 2021.
For the year ended September 2024, Central Provident Fund Investment Scheme or CPFIS funds delivered a positive return of 14.7 per cent for investors.
A check over the past decade of returns by The Business Times found that most years registered single-digit positive returns – except for 2017 and 2021 when the positive returns were in double-digits, and two other years of negative returns.
A report by financial-services firm Morningstar revealed on Tuesday (Nov 12) fixed income and money market funds drew the most interest from investors; they led the pack with net inflows of S$1.9 billion and S$1.5 billion, respectively.
But interest in stocks fell, with S$436.5 million in net outflow in Q3 – a turnaround from S$261.2 million in inflows in the preceding quarter, said Morningstar.
Alternatives and commodity-focused funds also drew less interest; outflows exceeded inflows to the tune of S$11.2 million in net outflow for alternatives, and S$7.3 million for commodity-focused funds.
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The overall three-month average return for CPFIS-included funds came in at 2.5 per cent in Q3 – down from 3.1 per cent in the second quarter, but they still outperformed global stocks: the MSCI World index rose only 0.6 per cent.
In Q3, all asset classes posted gains, with the most significant improvement recorded by fixed income. This asset class enjoyed gains of 3.6 per cent, up from 0.03 per cent in the previous quarter.
Morningstar said: “All other asset classes remained fairly stable, except for equity funds, which fell to 2.5 per cent from last quarter’s return of 4.1 per cent.”
The financial services firm further noted that over a one-year time period, the profile of investor returns remained broadly unchanged, with equity funds maintaining their lead with a gain of 17 per cent.
Fixed-income funds and allocation funds also registered positive returns of 7.9 per cent and 13.6 per cent, respectively, in the one-year period.
Meanwhile, money-market funds also performed well, with an average positive return of 3.7 per cent.
The research house cited various events are expected to “weigh heavily on investors’ minds”.
China’s fiscal attempts at jump-starting economic growth, for one, will be key in shaping investor sentiment in the final quarter of the year, as well as in 2025, said Morningstar.
It added: “As we look towards the next round of rate cuts by the Federal Reserve, the European Central Bank and the Bank of England, others have been more reticent – with Japan, India and Australia being noteworthy for preaching a more measured approach to monetary policy.”
The research house also projects that investors will begin to show greater interest in more cyclical sectors and companies that benefit from lower funding costs in Asia.
