KUALA LUMPUR (March 4): The Employees Provident Fund (EPF) saw its assets under management dropped for the first time in history in 2022, given the huge outflow of funds due to withdrawals by its members.
The challenging market conditions also weighed on the retirement fund's total investment assets, said EPF chief executive officer Datuk Seri Amir Hamzah Azizan at a media briefing to announce its 2022 financial performance on Saturday (March 4).
The EPF’s total investment assets came in at RM1 trillion as at Dec 31, 2022, down marginally by 0.7% from RM1.01 trillion in 2021.
Amir Hamzah said RM145 billion was withdrawn by members under four withdrawal schemes, namely i-Lestari, i-Sinar and i-Citra and the special withdrawal facility (Pengeluaran Khas).
Hence, he said continuous efforts in diversification of asset classes, geography and strategy are required to ensure sustainable performance.
With this, the EPF adopted active liquidity management to minimise the impact of the fund withdrawals. This was evidenced by the EPF’s diversification into foreign assets and currencies, which allowed it to realise additional gains with profits from non-ringgit sources, and added value to the retirement fund’s overall return.
As at end-December last year, foreign investment made up about 36% of the EPF’s investment assets, and contributed 45% of the fund's total gross investment income.
Building resilience amid economic challenges
EPF chairman Tan Sri Ahmad Badri Mohd Zahir said the fund anticipates that the 2023 investment climate will continue to be challenging in the short and medium term.
Citing World Bank data, he said growth in emerging markets and developing economies is expected to decelerate to 2.7% in 2023, from 3.8% in 2022, reflecting weaker external demand compounded by high inflation rates, together financing policies by central banks and other domestic and geopolitical headwinds.
“The continuing uncertainty underscores the need for a thoughtful approach that focuses on building resilience, while aligning with the EPF’s long-term investment objectives, in accordance with our strategic asset allocation,” he said in a statement on Saturday.
When asked about the EPF’s investment strategy amid a challenging investment climate, its chief investment officer Rohaya Mohammad Yusof said there had not been changes in terms of investment strategy because the fund is looking at it on a long-term basis.
“We are guided by asset allocation, [and] we have stringent allocation for the mid to long term. The fund has good fundamentals, good returns and good dividend-paying stocks. These are companies that [we] continue to have [in our pockets],” Rohaya added.