Growth fund vs STI ETF

Dear Mr Tan KL,
I would like to ask your advise on a good investment strategy for my CPF special account, since the money is for the long term. Is there a safer product that gives a better return than the 4-5%) offered by CPF? Would you consider NTUC Income's Gowth Fund as a good investment?

REPLY
The Growth Fund has an annual fee of about 1% p.a. and an upfront cost of about 3%. The STI ETF has an upfront fee of 0.3% and an annual fee of 0.3%. The risks of both funds are similar. Over a 20 year period, the STI ETF should be able to get a yield that is about 15% higher than the Growth Fund, based on similar risk profiles. It is better to choose the STI ETF than the growth fund.

If you do not wish to take the risk and uncertainty, it is better to leave your money in the special account as the interest rate is quite attractive.