By Michelle Tay

LAST year's market meltdown has slashed over a third of the value of the investment of retirement savings in stocks and unit trusts under the Central Provident Fund Investment Scheme (CPFIS).

Their plunging values were roughly in line with a slump that hit bourses around the world. Only the traditionally safe haven of bonds saw investment growth under the CPFIS.

According to Lipper, a fund research and analysis firm, unit trusts available under the CPFIS retreated 40.24 per cent on average, while investment-linked insurance products (ILPs) fell 36.06 per cent.

CPFIS investors who put their cash in bond funds, on the other hand, gained 1.9 per cent over the previous year.

Among the CPFIS-included ILPs, bond global funds and bond Singapore funds have consistently been the best performers over the last three years, said Lipper.

The DWS Lion Bond SGD, for example, is one of five top-performing unit trusts named Lipper Leaders.

Lipper noted that the MSCI World Index shed a total of 40 per cent last year, while the Straits Times Index lost 49 per cent.

The final quarter of last year alone saw CPFIS-included funds lose an average of 16.82 per cent, as global bourses slumped after the failure of Lehman Brothers.

Even before that, nearly half of all CPFIS investors - or 440,000 of them at the time - who sold their Ordinary Account investments in the year ended Sept30 last year had lost money.

Still, figures from the CPF Board show that CPF members remain invested in insurance policies and unit trusts.

As of Sept 30 last year, CPF members had withdrawn $7.8 billion from the CPF Special Account for investments, of which nearly 80 per cent, or $6.19 billion, went into insurance policies. About $1.61 billion went into unit trusts.

As of Dec 31, total investments stood at $7.7 billion - $6.1 billion in insurance policies and $1.5 billion in unit trusts.

Mr Rajeev Baddepudi, Lipper's research analyst of Asean, said: 'The outlook for the global economy continues to look gloomy, while aggressive stimulus measures rolled out by the governments and central banks of most major economies have yet to take root.

'On the positive side, valuations are attractive across most asset classes, and cautiously optimistic, longer-term investing will prove profitable in the coming months.'

This article was first published in The Straits Times.