KUALA LUMPUR (March 2): The Employees Provident Fund (EPF) is optimistic about its Malaysian investment outlook this year due to the low base in 2021, while indicators point to a recovery in economic activities.
This includes the rebound in EPF members' total monthly contributions in the fourth quarter of 2021 which exceeded pre-pandemic levels, on top of encouraging vaccination rates and economic growth trends, said EPF chief executive officer Datuk Seri Amir Hamzah.
As of December 2021, the number of active EPF members rose 1.3% to 7.7 million from 7.6 million in December 2020, whereas active monthly contributors rose 3.6% to a high of 5.8 million, from 5.6 million.
"You can have points of improvements… Regularity of contribution implies to us that businesses are coming back," Amir said during the EPF's financial year 2021 (FY21) performance briefing.
He earlier alluded to the sideways performance of Bursa Malaysia, which trended 1.31% lower across the pandemic years of 2020 and 2021, compared to other benchmarks in the period including the FTSE World Developed (up 36.24%) and MSCI Asia Ex-Japan (up 13.96%).
"Specifically for Malaysia, we are optimistic because we start with a low enough base," Amir later said.
"Generic trends that we have to address [are] like ESG, companies must also start taking them on," he commented, adding that the retirement fund may publish its ESG framework by the end of this month, from the initial target of end-2021.
At end-2021, EPF's domestic investment assets fell about 2.4% to RM639 billion from RM655 billion at end-2020.
The latest tally made up about 63.4% of the group's total investment assets of RM1.008 trillion at end-2021, and contributed to 44% of overall returns in 2021, as opposed to 56% by overseas assets.
According to EPF's figures, its domestic assets under management by external fund managers amounted to 7.67% of total domestic assets, or RM49 billion at December 2021.
As of December 2020, EPF outsourced 15.55% of its total investment assets or RM155.18 billion to external fund managers.
Looking for companies at pre-IPO stage
This year, the EPF plans to allocate RM1 billion to invest in companies that are at pre-initial public offering (IPO) stage.
This will bring more companies to Bursa Malaysia, while curbing the flight of Malaysian companies that may otherwise seek investors elsewhere by providing the capital they need, Amir said.
"We have not seen enough stimulus going into Bursa [Malaysia]. We have seen investment traps [in the space between] where companies move on from VC (venture capital market) to pre-IPO. There is a gap in that market [for investors].
"Towards the later stage of the pre-IPO, there is a stage that EPF can play, because we see that we can manage the risk element and we see fairly good returns there," he said.
"We are working with specific funds to promote that, and looking at companies which are at [that] stage," he added.
EPF, the largest institutional fund in the country, holds 15% of Bursa Malaysia's market value. It also holds 25% in the nominal value of Malaysian Government Securities and Government Investment Issues in the market.