I see First State Bridge frequently among the most popular recommended funds. This post is to give you some background on it.
First state bridge is a “balanced-risk” fund that helps you get invested into equities and bonds together. It offers you FREE diversification through one fund and its performance is smoother than pure equity etf/funds or investing in shares.
As shown below, it is held almost 50%-50% allocation and investing into such a fund gives you FREE auto-rebalancing between equities and bonds!
First state bridge is Asian in focus and if you like prospects of asian companies, this definitely works.
How does it compare to other “balanced funds?”
There are the only these few CPF approved balanced funds.
It has superior 3y, 5y and 10y average p.a performance than its peers. The results in the table is already nett performance. The FTIF Templeton Global balanced fund is abit different as it will invest for you globally (as its mandate) and some will be into US equities which I personally think is expensive in valuation currently.
First state bridge also has the largest fund size (>SGD$1.5B) and the lowest annual expense ratios (1.42%p.a) amongst these 4 funds.
Why invest your CPFOA into it?
CPFOA delivers 2.5%p.a guaranteed interest. Somewhat about inflation rate.
Of course, investing returns do not come with a guarantee and no one is sure what will happen to performance in a years time.
Stock markets can drop. The 50% allocated to Asian stocks through First state Asian Equity Plus (which is what first state dividend advantage gets into) can drag down short term performance.
BUT As shown in the 5, 10y investment horizon, the chances of growing your CPF at a better rate is extremely good.
A $20,000 kept in CPF grows to $25,602. In comparison, an investment into First state bridge will grow your CPF account to $35,480 (simple backward projection of 5.94%p.a without factoring any sales charges yet). You potentially build $10,000 more CPF.
Now whether $10,000 is going to make a major difference to your retirement a not is not the question.
The question is if simple positive steps to grow your CPF are available, shouldn’t you take it?
In most cases, investing CPF is for the long term because you can’t take it out anyway (other than for housing needs usually).
If you are keen to start investing your CPFOA but want proper advice, here’s what you can look forward to with us.
- We can handhold you to start and through the ups and downs. Especially in the downs actually. A lot of successful investing is on making good emotion-free decisions.
- We will add in other investment pieces to get you better results. 3 examples are shown below and they have delivered more than 10%p.a more in the last 2 years
- Holistic retirement planning
On a chart, this is how it compares (the green line is First state bridge).
Check out our investment portfolio and fees below to find out more!