KUALA LUMPUR (Feb 18): The Employees Provident Fund (EPF), which declared its 2018 dividends on Saturday, said equities continued to be the main contributor of income with 57.55 per cent amounting to RM29.28 billion, despite recording a slight decline of 6.96 per cent, compared with 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 & equivalent and loans & bonds, and in total contributed 36.13 per cent or RM18.38 billion of the RM50.88 billion investment income earned for the year, said chairman Tan Sri Samsudin Osman said in a statement on Saturday.
EPF declared a dividend rate of 6.15 per cent for conventional savings with a payout amounting to RM43 billion and 5.9 per cent 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 & infrastructure contributed RM2.10 billion in investment income in 2018 with a decline in annual growth of 29.29 per cent compared with 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 (ROI) due to the high base effect in 2017 where a onetime transaction took place.
The asset class continued to deliver over eight per cent return, annually, for the past five years, a premium of 3.29 per cent over fixed income instruments.
Foreign investments across asset classes contributed 37.52 per cent to EPF’s gross investment income, lower compared with 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 per cent, cost to gross income of 4.24 per cent and cost to average total asset of 0.17 per cent.
Commenting on the investment outlook, Samsudin said: “The volatility in the global markets is likely to persist over the long-standing trade dispute between the United States (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 Sunday, Feb 17, 2019, 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.