EPF to deliver good returns above inflation rate, says CEO
Published on: Wednesday, May 04, 2016
Kuala Lumpur: The Employees Provident Fund (EPF) is optimistic that it will continue to deliver real rate of return of 2.0 per cent above the rate of inflation this year despite the volatility in equity markets, says Chief Executive Officer Datuk Shahril Ridza Ridzuan.He said the "inflation plus 2.0" key target, which defined its contribution to investors, has led EPF to outperform over the last five to six years when it managed to deliver a larger return of "inflation plus 4.0"."In the first quarter of this year, the equity market performance was very tough not only for EPF but also for any investment fund manager around the world given the high volatility and low yield.ADVERTISEMENT "So we expect, with all these challenges, to continue focusing on the "inflation plus 2.0" to ensure that we can deliver real growth for our investors and members for a very long period of time," he told reporters after releasing the fund's 2015 Annual Report here Tuesday.Meanwhile, Bank Negara Malaysia expected inflation to grow between 2.5 per cent and 3.5 per cent this year.In addition, Shahril said the retirement fund planned to increase its long-term domestic investments in a move to diversify its portfolio further into inflation-assets such as utilities, infrastructure, highway and energy sectors.He said EPF was cash rich and can undertake any kind of investment, locally.ADVERTISEMENT Shahril added that the broader income segments would enable EPF to cushion the impact from the uncertain global economic environment and the short-term swings in the equity markets."In 2015, the global market performed for us while in 2014, the domestic market performed for us.
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"The whole point is to make sure that we can ride through via a very short-term cycle of volatility in any given market or asset class," he added. EPF's foreign investments, which makes up 25 per cent of its total assets, contributed 48 per cent of gross investment income of RM44.23 billion, achieved last year.The fund, to date, has invested slightly lower than the limit of 26 per cent set by the government to invest in offshore assets.Meanwhile, Shahril reiterated that EPF did not have a significant exposure in 1Malaysia Development Bhd's (1MDB) RM5 billion sukuk issuance as the fund only held about four per cent or RM200 million of the total issuance.Meanwhile, EPF remains committed to strengthen its leadership and governance, en route to foster a performance-based corporate culture. Shahril said good governance and integrity would continue to drive the fund."EPF will continue to enhance our customers' experience by introducing new online facilities and roll out more self-service options for both members and employers," he said.Shahril said the e-Pengeluaran, an online platform set up specifically for individual EPF withdrawal, would be extended to include withdrawals for education and critical illnesses. "We also want more banks to participate in the e-Pengeluaran for withdrawals to purchase houses," he said.As at Dec 2015, there were 14.55 million EPF members, out of which 6.79 million are active contributors.As for total investment assets, it rose 7.54 per cent to RM684.53 billion in 2015 from RM636.53 billion registered in 2014.Shahril said EPF ended the year with RM44.23 billion in total gross investment income, up 13.2 per cent, from RM39.07 billion achieved in 2014.Stay up-to-date by following Daily Express’s Telegram channel.
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"Gross return on investment was higher at 7.48 per cent compared with 7.25 per cent recorded in the previous year."Net inflows stood at RM15.73 billion, with annual contribution higher by 4.91 per cent at RM59.98 billion against RM44.25 billion of total annual amount withdrawn," he added. – Bernama