The Employees Provident Fund (EPF) is optimistic that it will continue to deliver real rate of return of 2.0 percent above the rate of inflation this year despite the volatility in equity markets, says chief executive officer 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.
“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 in Kuala Lumpur today.
Meanwhile, Bank Negara Malaysia expected inflation to grow between 2.5 percent and 3.5 percent 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.
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.
“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 percent of its total assets, contributed 48 percent of gross investment income of RM44.23 billion, achieved last year.
The fund, to date, has invested slightly lower than the limit of 26 percent 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 percent or RM200 million of the total issuance.
- Bernama
