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What is the CPF Investment Scheme Risk Classification System?

The Risk Classification System is developed to help you determine which of the various investment options may be most appropriate for your investment circumstances, through better understanding of the level and type of risk associated and your risk tolerance. It splits the investment risk associated with Unit Trust, Investment-Linked Products (PDF, 0.1MB) and Exchange Traded Funds (PDF, 40KB) included under CPF Investment Scheme Funds into two broad categories, i.e. "Equity Risk" and "Focus Risk".

The CPF Board does not give any consideration to nor has made any investigation on the investment objectives, financial situation or particular needs of the reader, any specific person or any group of persons. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or any group of persons acting on any information, opinion or statement expressed in these FAQs.

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Equity Risk is related to exposure to the "riskier" types of investments in the Funds. The greater the proportion of assets invested in stocks, the higher the Equity Risk (i.e. higher risk category). Conversely, the greater the proportion of investments in bonds and cash, the lower the Equity Risk (i.e. lower risk category).

Focus Risk reflects how focused the investments of the Funds are in particular geographical regions, foreign countries, foreign currencies, industries or individual companies. A Fund that invests in shares of companies from around the world would have lower Focus Risk (i.e. broadly diversified) than a fund that invests in shares of companies from one country only (i.e. narrowly diversified).