EPF to increase investment in domestic asset classes this year

EPF chief executive officer Datuk Seri Amir Hamzah Azizan

KUALA LUMPUR: The Employees Provident Fund (EPF) intends to increase investment in various domestic asset classes in 2022 in line with the reopening of economies and businesses in the country.

Chief executive officer Datuk Seri Amir Hamzah Azizan said as a major investor in Malaysia’s financial markets, this would help catalyse economic activity and assist in the recovery of the economy.

"We believe that the reopening of economies and businesses, as well as various initiatives under the National Economic Recovery Plan, would provide fertile ground for the EPF to increase its investment efficiencies and leverage the opportunities that a recovery brings,” he told a media briefing on the EPF 2021 financial performance here, today.

Amir Hamzah said the EPF’s internal data posited that the labour market was nursing back to health, with contribution data, member registrations, and active employers all returning to pre-pandemic levels in the fourth quarter of 2021.

"With international borders set to reopen and vaccination rates among the best in the world, Malaysia is poised for a rebound in 2022,” he said.

For 2021 performance, Amir Hamzah said the continued market recovery, particularly in the developed markets, contributed to the EPF’s listed equity portfolios, providing opportunities for it to realise profits.

"Equities, particularly foreign listed equities, which recorded a return on investment (ROI) of 10.44 per cent, continued to be the driver of returns. Total income contributed by the equity asset class was RM38.93 billion, or 58 per cent, of the EPF’s total gross income.

"The private equity portfolio also demonstrated strong performance, recording an ROI of 19.01 per cent,” he said.

With almost half of the EPF’s total asset allocation in fixed income instruments, comprising Malaysian government securities and equivalent, as well as loans and bonds, he said the retirement fund was able to maintain steady returns. Income from the portfolio contributed RM19.50 billion, or 29 per cent, of the EPF’s total gross income.

Meanwhile, Amir Hamzah said the EPF’s overseas assets were critical contributors to the overall performance, where different asset classes, markets, and currencies provided income stability and added value to the retirement fund’s overall return.

"As at December 2021, about 37 per cent of EPF’s investment assets were outside of Malaysia across all asset classes,” he said.

Overall investment assets grew 0.8 per cent to RM1.01 trillion from RM1 trillion in 2020, while membership base as at December 2021 grew by 2.0 per cent to 15.2 million, while employers registered with the EPF stood at 553,000.

With an average three-year real dividend after adjusting for inflation of 4.91 per cent for Simpanan

Konvensional, and 4.51 per cent for Simpanan Shariah, he said the EPF had surpassed its strategic target

of declaring an average real dividend of at least 2.0 per cent on a rolling three-year basis.

"The dividend payout for each savings was derived from total gross realised income for the year after deducting the net impairment on financial assets, cost write down on listed equities, unrealised losses due to foreign exchange rate, and derivative prices, investment expenses, operating expenses, statutory charges, as well as dividend on withdrawals,” he added. - Bernama