Risks for CPF Members If Direct Investments Allowed in US Equity Index Funds Not in Current CPFIS-Approved Products

Mr Gerald Giam Yean Song asked the Minister for Manpower (a) what specific risks does the CPF Board believe CPF members will face if allowed to invest directly in US equity index funds that are not already present in the current CPFIS-approved products; (b) how are these perceived risks quantified; and (c) whether these risks outweigh the demonstrated long-term outperformance of US equities.

All investments are subject to risk, and investments in foreign products are further subject to regulatory risks of other jurisdictions. To manage these risks for Central Provident Fund (CPF) members, the CPF Board only includes products under the CPF Investment Scheme (CPFIS) after carefully considering factors, such as investment track records and investment-related fees. Additionally, these products must be registered with the local authorities.

CPF members can already invest directly in a number of US equity index funds under the CPFIS today. Product providers, including other US equity index fund managers, can apply for their products to be included under the CPFIS, depending on their commercial considerations, and the CPF Board will assess accordingly.