CPF Board - Lower Charges On New CPF Investments In Funds Under CPFIS To Benefit Members

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News Releases

Lower charges on new CPF investments in funds under CPF Investment Scheme (CPFIS) to benefit members

News Release by:
Central Provident Fund Board
28 December 2006 --

High sales charges and expense ratios erode investment returns. CPF Board will be implementing the following changes for new investments in funds (unit trusts and investment-linked insurance products) using CPF monies:-

a) Sales Charges
From 1 July 07, sales charges must not exceed 3%.

b) Expense Ratios
From 1 Jan 08, expense ratios¹ must not be higher than that shown in Annex A. The Board will review these ratios from time to time.

2. Funds that are unable to meet either of the above criteria will not be allowed to take in new CPF monies.

3. CPF members who have already invested in such funds will not be required to redeem their investments. However, if they wish to switch from these funds to other CPFIS funds, they can do so free of charge within a stipulated timeframe. The insurers and fund management companies will notify members of their options and facilitate the switching.

4. The Board would like to remind members that charges on their investments are only one of the factors affecting returns. Members must also take into account their investment objective and risk appetite and adopt a long term view when they are making their investments.

Click here for more information .

PUBLIC ENQUIRIES

For queries, please visit www.cpf.gov.sg or call CPF Call Centre at 1800-227-1188.

Annex A

Expense Ratios Criterion By Risk Categories (Based on median expense ratios of funds included under CPFIS as at 31 December 2004)
Risk Categories²	Expense Ratios Criterion (%) [Rounded off to the nearest 0.05]
Higher risk	1.95
Medium to High Risk	1.75
Low to Medium Risk	1.15
Lower Risk	0.65

Annex B

Background Information

In December 2005, CPF Board announced that it would tighten the admission criteria for funds seeking to be included under CPFIS. From 1 Feb 2006, new funds must meet the following criteria for inclusion under CPFIS:

a. Top 25 percentile in their global peer group
b. Expense ratio lower than median of existing CPFIS funds in its risk category.
c. Preferably have a track record of at least 3 years.

CPF Board will publish on its website two lists of funds - List A and List B - to keep members informed of existing funds which have and have not met the new admission criteria respectively. CPF Board encourages existing funds admitted before 1 Feb 2006 to qualify for List A by applying to be evaluated under the new criteria.

Funds that meet the new funds admission criteria following evaluation after 1 Feb 2006 (List A funds) are as follows:

Unit Trusts
1. Aberdeen Asian Smaller Companies Fund
2. DWS Asian Small/ Mid Cap Fund
3. Lion Capital Singapore Fixed Income Investment

Investment-Linked Insurance Products
1. GE GreatLink Global Technology Fund

¹The expense ratio will be based on the fund’s audited expenses for its latest financial year.

²Risk categories are:
a. Higher risk - Funds that invest in equities.
b. Medium to high risk – Funds that invest in a mixture of equities and bonds.
c. Low to medium risk – Funds that invest in fixed income products or bonds.
d. Lower risk – Funds that invest in money market products.

Last Updated on: Thursday, August 28, 2008 at 9:10 PM