However, the options are rather limited as the CPF Board does not want you to take too many risks.
If you are thinking of buying US stocks using your CPF funds, here’s what you need to know.
Can I buy US stocks with my CPF funds?
Under the restrictions set out in the CPF Investment Scheme, you are only able to invest up to 35% of the investible savings in your CPF OA into shares. However, the shares that you can buy are limited to those that are listed on the SGX. As such, you are unable to buy US stocks directly using your CPF funds.
The CPF Investment Scheme (CPFIS) offers you the option to purchase shares using your CPF OA.
However, this scheme does not allow you to use your CPF SA funds to invest in shares!
Here are some limitations regarding this scheme:
#1 You are only able to invest 35% of your investible savings
You are unable to use your entire CPF OA funds to invest in shares. Instead, you are only able to invest 35% of your investible savings.
#2 You are only able to invest in approved shares that are listed on the SGX
The shares that you can invest in using your OA funds have to be:
- Listed on the SGX
- Under the approved list of shares
These shares have to meet certain criteria that are set out by the CPF Board.
As such, you are unable to use your OA funds to buy any US stocks that are listed on the NYSE or Nasdaq!
#3 You can’t buy the S&P 500 ETF (S27) that is listed on the SGX
However, you can’t use your CPF OA funds to buy this ETF!
This is because there are only 5 ETFs that you can buy with the CPFIS:
|ABF Singapore Bond Index Fund||A35|
|Nikko AM SGD Investment |
Grade Corporate Bond ETF
|Nikko AM Singapore STI ETF||G3B|
|NikkoAM-StraitsTrading Asia |
ex Japan REIT ETF
|SPDR Gold Shares||O87|
|SPDR Straits Times Index ETF||ES3|
Both G3B and ES3 track the Straits Times Index (STI). This is Singapore’s version of the S&P 500, and you can view a comparison here between these 2 indices.
Since S27 is not on this list of approved ETFs, you will be unable to buy this ETF using your CPF funds.
What options do I have if I want to buy US stocks with my CPF OA funds?
To gain exposure to US stocks with your CPF funds, you can buy Unit Trusts that are approved by CPF which contain US stocks. This is because you are unable to buy individual US stocks with your CPF funds.
There are around 84 Unit Trusts that are on the approved list by CPF. To identify the ones that contain US stocks, you can take a look at the Risk Class column.
You can see that some of them have the label: ‘Higher Risk – Narrowly Focused – Country – USA‘.
This means that the fund is mainly exposed to stocks in the US.
To find out which US stocks are found in these funds, you will need to go to the fund’s information page to find out more.
An example: Franklin US Opportunities Fund
For example, here’s the link to the Franklin US Opportunities Fund. This fund mainly invests in US companies with strong growth potential, and you can view the entire holdings of their funds here.
However, their charges are rather high. You will incur an initial charge of 5%, and an annual charge of 1.5%.
The fees that you pay are much higher than the expense ratios you may pay with an ETF!
Can I use my CPF funds to buy S&P 500?
You can use your CPF OA funds to buy the Lion Global Infinity US 500 Stock Index Fund which is available on Endowus Fund Smart. This fund tracks the S&P 500 index and is the main way of gaining exposure to US stocks at a lower cost.
Compared to actively managed funds, the Lion Global Infinity US 500 fund tracks the S&P 500 index, making it more passive.
The fees that you pay when investing with Endowus is greatly reduced, at 0.395% a year! However, you will need to add on the fees that are charged by Endowus too.
Nevertheless, it is still cheaper compared to buying other actively managed funds with your CPF OA funds.
How can I buy the S&P 500 using my CPF funds?
Here are 5 steps you’ll need to buy the Lion Global Infinity US 500 Stock Index Fund which tracks the S&P 500 using your CPF funds:
- Link your CPF IS Account with Endowus
- Create a Endowus Fund Smart account with your CPF funds
- Select the Lion Global Infinity US 500 Stock Index Fund
- Select 100% allocation for the Lion Global Infinity US 500 Stock Index Fund
- Select your initial investment amount
Here is each step explained in-depth:
Link your CPF IS Account with Endowus
After creating an account with Endowus, you will need to link your CPF Investment Account with the platform.
This can be done by going to ‘My Linked Accounts‘, and selecting CPF Investment Account.
Create a Endowus Fund Smart account with your CPF funds
After linking your CPF-IA to Endowus, you can create a Fund Smart portfolio that just tracks the S&P 500.
You can go to Invest, and then scroll all the way down to Fund Smart.
On the ‘Funding Source‘ page, you can select CPF OA as your source of funds.
This means that Endowus will use your CPF OA funds to invest in this Fund Smart Portfolio that you’re creating.
Select the Lion Global Infinity US 500 Stock Index Fund
Once that is done, you will need to select the Lion Global Infinity US 500 Stock Index Fund.
There are quite a lot of funds that you can invest with using Endowus’ Fund Smart. The Lion Global Infinity US 500 Stock Index Fund is one fund that you can buy using cash, SRS or CPF.
Select 100% allocation for the Lion Global Infinity US 500 Stock Index Fund
After selecting the Lion Global Fund, you can select a 100% allocation to this fund at the ‘Fund Selection’ page.
By creating a single fund portfolio, you will only pay 0.3% in management fees, compared to the usual 0.4%.
Even though this may seem like a small amount, it does come up to significant savings when you have a larger sum in this portfolio!
Select your initial investment amount
The last step will be to select the initial investment amount when you create this portfolio.
If this is the very first time that you’re funding your Endowus portfolio, the initial investment amount is $1,000. For every subsequent investment that you make, the minimum you will need to fund your account is $100.
After confirming the creation of this Fund Smart portfolio, Endowus will deduct the funds from your linked CPF account and invest it.
Fees involved (management fees and agent bank fees)
Apart from the expense ratio that the fund charges you, you will need to pay these fees to Endowus and the bank that holds your CPF-IA:
|Endowus||0.3% p.a. (Single fund) |
0.4% p.a. (Multiple funds)
|Agent Bank||Transaction: $2-$2.50 |
Service Charge: $2-$2.50
The transaction fees are rather high at between $2 – $2.50. To reduce the amount of fees that you are paying, you can try to make a lump sum investment, rather than multiple investments each month.
All of these will add up to the fees that you incur when investing in the S&P 500 using this method!
While you aren’t able to buy US stocks directly with your CPF funds, one way to still gain exposure to the US markets is by investing in a fund that contains US stocks.
If you are looking for a more passive approach to investing in US stocks, buying a fund that tracks the S&P 500 index with your CPF funds will be the best way.
Although Endowus charges rather low fees, you may still want to take note of the additional fees that you’ll incur apart from just the fund’s management fees!
👉🏻 Referral Deals
If you are interested in signing up for any of the products mentioned above, you can check them out below!
Endowus Referral (100% access fee credit till 31 December 2021)
If you are interested in signing up for Endowus, you can use my referral link to create your account.
There is no minimum investment amount, no cap on the fee credit that you can obtain until 31st December 2021.
If you invest at least $1,000 with Endowus, you will receive an additional $20 access fee credit!
The access fee does not have any expiry date. As such, you can invest at any pace that you wish, and still get $20 off your fees!
For more information, you can view the details on Endowus’ website.
Bonus SRS Promotion (Up to $100 SRS cash rewards till 20 November)
If you wish to invest your SRS funds with Endowus, you can use this alternative link to sign up for an Endowus account.
You will be able to receive an additional amount of up to $80 (on top of the $20 fee credit) in your UOB Kay Hian Account!
Here’s what you need to do:
- Sign up for an Endowus account
- Make an investment of at least $5,000 into an SRS portfolio with Endowus
- Hold the investment until the end of the promotional period (20 November)
Here are the rewards you’ll receive, depending on the amount you invested:
|Amount Invested |
|$5,000 – $15,299||$20|
|$15,300 – $35,699||$60|
The cash reward has a minimum 1 year holding period in the UOB Kay Hian trust account. You are free to invest the cash reward, or use it to pay for Endowus access fees
For more information, you can view Endowus’ website for the details of this promotion.
Are you passionate about personal finance and want to earn some flexible income?