EPF: Better performance from local market this year

KUALA LUMPUR: The Employees Provident Fund (EPF), which posted a 13.2% growth in investment income last year, expects investments in the domestic market to perform better this year in view of the volatile external environment, in particular the equity market.
For 2015, foreign investments contributed 48% of the total RM44.23 billion gross investment income even though it only made up 25% of total assets.
However, EPF CEO Datuk Shahril Ridza Ridzuan foresees a reversal this year, with domestic investments seen to make better income contribution in 2016.
“This year, we expect a pick up in domestic market performance, that will make up some of the short fall in the global market,” he told reporters at the launch of EPF Annual Report 2015.
Acknowledging that it will still be a challenging market this year, Shahril said EPF would strive to achieve its dividend target of inflation rate plus 2%.
“It’s extremely difficult for the equity market this year, this first quarter was very tough given the high volatility in the equity market. With all these challenges in place, we’ll continue to focus on the inflation plus 2% target,” he said, noting that EPF’s diversified portfolio will help to ride through the volatility.
EPF declared a 6.4% dividend payout in 2015 amounting to RM38.24 billion.
Shahril said EPF will continue to invest heavily in the Malaysian market with its targeted assets such as power plants, toll highways and other infrastructure projects.
“We don’t have shortage in money for our investments in Malaysia, we’re exploring and getting the right assets,” he added.
Last year, EPF saw a 4.91% rise in total contributions to RM59.98 billion against total withdrawal of RM44.25 billion, resulting in a net inflow of RM15.73 billion.
Its total investment assets expanded 7.5% from RM636.53 billion to RM684.53 billion in 2015. Gross return on investment, meanwhile, grew 23 basis points from 7.25% to 7.48%.
As at end-December 2015, EPF had a total 14.55 million members, of which 6.79 million are active members.
On another note, Shahril said EPF’s 65.1%-owned Malaysia Building Society Bhd (MBSB) has not applied for a banking licence.
“What MBSB is trying to do is to revamp, and bring it up to bank standards and enter the mainstream. MBSB has not applied for a banking licence, but they’re trying to put themselves on the right platform, either to integrate with existing banks or to do something else to move into the banking framework,” he explained.
Recall that MBSB’s plan to merge with Bank Muamalat Malaysia Bhd was called off early this year as shareholders of both companies were not able to reach an agreement on the terms and conditions of the merger.