KUALA LUMPUR — May 3, 2016: The Employees Provident Fund (EPF) is optimistic that it will continue to deliver a real rate of return of 2.0 per cent above the rate of inflation this year despite the volatility in equity markets,
According to chief executive officer Datuk Shahril Ridza Ridzuan, 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,” Shahril said after releasing the fund’s 2015 annual report here today.
Bank Negara expects inflation to be between 2.5 per cent and 3.5 per cent this year.
The EPF also plans to increase its long-term domestic investments in a move to diversify its portfolio further into inflation-assets such as the utilities, infrastructure, highway and energy sectors.
Shahril said 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 market.
“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.”
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 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.
In relation to 1MDB, Shahril pointed out that EPF does not have a significant exposure in the company ‘s RM5 billion sukuk issuance since it holds only held about four per cent or RM200 million of the total. — Bernama