Against the backdrop of global market uncertainty, Singaporean investors are choosing safety over speculation.

New data from national funds data platform FundSingapore and Morningstar reveal a decisive pivot towards more stable investments, with money market funds and local fixed income products seeing significant inflows under the city-state’s Central Provident Fund Investment Scheme ( CPFIS ).

The second quarter saw a sharp 86% surge in net fund flows, with Singapore-authorized and recognized unit trusts taking in S$4.1 billion ( US$3.18 billion ), up from S$2.2 billion in Q1. For the first half of 2025, total inflows hit S$6.3 billion.

But investors weren’t chasing returns; they were seeking safety. Nearly 60% of all inflows went into money market funds, which saw S$2.8 billion in net new capital. Fixed income funds followed, attracting S$918.7 million, while allocation funds added S$318.5 million.

Equity funds, in contrast, saw investor enthusiasm wane. They registered just S$80.9 million in net inflows, a steep drop from S$397 million the quarter before, underscoring a flight to lower-risk strategies despite relatively strong returns from equities.

Shift to safer, liquid assets

While CPFIS funds continue to deliver respectable long-term returns, the Q2 performance illustrates the ongoing tension between return-seeking behaviour and risk aversion in today's environment.

Investors are clearly hedging, allocating to safer, liquid assets like money market funds while keeping a foot in higher-performing sectors like equity and fixed income.

“In a volatile global environment, investors turned to Singapore-focused equity and debt funds for their defensive, high-quality appeal,” says Morningstar senior analyst Arvind Subramanian. “At the same time, many chose to stay on the sidelines, leading to sizeable inflows into money market funds.”

The combined average return of all CPFIS-included funds, which include unit trusts and investment-linked insurance products ( ILPs ), fell by 3.16% in Q2. This decline came despite strong gains in global equities: the MSCI World Index rose 5.63%, although global bonds were weaker, with the FTSE World Government Bond Index down 0.90%.

But over the longer term, CPFIS funds remain on a solid footing. For the 12 months ending June 30, ILPs returned 5.98%, and unit trusts did slightly better at 6.20%, leading to a combined annual gain of 6.07%.