Comparative study of risks and returns of CPF unit trusts and the share market

• Main Authors: Bay, Julie Yen Kheng, Oh, Chyi Haur, Tham, Linda Mun Har
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/51511
• Institution: Nanyang Technological University

This report analyzes the validity of the claim that investing in unit trusts is safer than investing in the stock market directly, leading to the returns being lesser respectively. Our sources come mainly from data in the Straits Times and include the Bid/Ask prices of unit trusts, STI, DBS-CPF and SES All-Shares Index stretching from April 1992 to March 1995. After carrying out the sample-t tests on a number of fifteen random samples and calculating the Betas of the unit trusts, we came to the conclusion that most of the CPF- approved unit trusts have higher returns than the market index. Moreover, for a given level of risk, the expected returns of the unit trusts are higher than the actual return. The authors recommend that readers should refer to other studies on this topic to further support their decisions on investment strategies.