Foreign Investments - 37.52% of EPF Income

Employees Provident Fund (EPF), which declared its 2018 dividends on Saturday, said equities continued to be the main contributor of income in 2018 with 57.55% amounting to RM29.28 billion, despite recording a slight decline of 6.96% compared to the RM31.47 billion in 2017.

This asset class remains integral in providing return enhancement to EPF’s portfolio.

EPF’s investments is in fixed income instruments, comprising Malaysian government securities and equivalent, and loans and bonds, and in total contributed 36.13% or RM18.38 billion of the RM50.88 billion investment income earned for the year, said chairman Tan Sri Samsudin Osman on Saturday.

EPF declared a dividend rate of 6.15% for conventional savings with a payout amounting to RM43 billion and 5.9% for Shariah savings with a payout amounting to RM4.32 billion.

He said loans and bonds continued to provide stable income through scheduled coupon payments, although capital gains from this asset class declined as a result of rising yields in a volatile market environment.

Real estate and infrastructure contributed RM2.1 billion in investment income in 2018 with a decline in annual growth of 29.29% compared to 2017, while money market instruments contributed RM1.12 billion in investment income during the year.

Samsudin said real estate and infrastructure recorded a lower return on investment due to the high base effect in 2017 where a one-time transaction took place.

The asset class continued to deliver over 8% return annually for the past five years, a premium of 3.29% over fixed income instruments.

Foreign investments across asset classes contributed 37.52% to EPF’s gross investment income, lower compared to previous years due to the decline in global and regional equity prices and volatility in foreign-exchange rates.

Foreign investments in 2018, nonetheless, added value to EPF’s overall portfolio by enhancing returns and cushioned some market volatility seen throughout the year.

Meanwhile, the EPF remained prudent in its expenses as indicated by the consistency in its key financial ratios, including the cost to asset under management (AUM) of 0.27%, cost to gross income of 4.24% and cost to average total asset of 0.17%.

“The volatility in the global markets is likely to persist over the long-standing trade dispute between the US and China. “We are also bracing ourselves for other external factors such as the impending Brexit deadline, slowdown in global growth and further US interest-rate hikes.

“Nonetheless, we remain committed to our long-term global diversification as guided by our strategic asset allocation. This has time and again served us well, especially during times of market uncertainties, and equipped us with the ability to withstand short-term volatilities.”

Members can check their EPF account statement for the crediting of the 2018 dividend starting yesterday, through i-Akaun or via the myEPF website at www.kwsp.gov.my.

The i-Akaun mobile application is available for download via Google Play Store or Apple App Store.