EPF diversifies portfolios to raise investments in global equity and fixed income

KUALA LUMPUR: The Employees Provident Fund (EPF) announced yesterday that it will increase its investments in global equity and fixed income.

This is part of its investment diversification strategy, which is in line with the mandate given by the Government for the EPF to now invest up to 23% of its investment assets in international markets.

In terms of cost, the fund's total exposure in global investment assets as at Dec 31, 2011 was only 13.37% of its total assets.

EPF chairman Tan Sri Samsudin Osman said performance in global equity and fixed income had generated good earnings for its members in 2011 despite the institution's conservative risk return profile. This contributed to the EPF declaring a 6% dividend and a total dividend payout of RM24.47bil.

“The EPF is effectively the second pillar for old age retirement for private sector workers in Malaysia. As the custodian to the retirement savings of more than 13 million members, the task of managing nearly half a trillion ringgit of retirement savings is indeed a heavy responsibility,” he said at the EPF Portfolio Managers Awards Ceremony for 2011 yesterday evening.

He said its move to increase its investments overseas was to complement EPF's long-term investment plan and to provide a reasonable rate of return to the savings of its members.

“The EPF faces constraints domestically given the limited breadth of investment products and liquidity to trade on large volumes. Aside from mitigating the concentration risk in the domestic market, overseas investments offer higher opportunities for capitalisation of returns over a long-term investment horizon,” said Samsudin.

Last year, an additional US$5.54bil (RM16.98bil) in international investments were made. As at Dec 31, 2011, the total capital drawdown in non-ringgit investments was approximately US$17bil (RM52.12bil).

Samsudin also mentioned that the EPF would be outsourcing US$1bil to eight fund managers for the global fixed income mandate by second quarter of 2012. “We will be outsourcing more funds this year to the existing conventional and syariah equity and fixed income mandate,” he said.

Amundi Malaysia Sdn Bhd was announced 2011's Best Overall Domestic Equity Portfolio Manager, an award based on a three-year rolling financial performance and quality of service measures. Nomura Asset Management Malaysia Sdn Bhd and Hwang Investment Management Berhad were the first and second runner-up winners respectively.

Amundi Malaysia also bagged the Best Three-year Domestic Realised Return Equity Manager award and the Best Risk-Return Domestic Equity Portfolio Manager award.

Meanwhile, KAF Fund Management Sdn Bhd emerged as the winner for the Best Overall Domestic Fixed Income Portfolio Manager and the Best Three-Year Realised Return Domestic Fixed Income Manager.