KUALA LUMPUR: The Employees Provident Fund’s (EPF) dividend payout of 6.9 per cent and 6.4 per cent to its conventional and syariah funds were deemed by research houses and analysts as as having “exceeded expectations.”
MIDF Amanah Investment Bank Bhd Head of Research Mohd Redza Abdul Rahman said the return for the syariah scheme in particular, was commendable considering it was its first year running.
“With the banking stocks gaining the most in the equities market last year, the 0.5 per cent can be considered above expectations. The dividend reflects a great practice by the EPF, a very prudent one and also reflects good governance in safeguarding returns and ensuring a transparent practices.
“Its overseas investment also did well as MSCI global , MSCI Asia excluding Japan and MSCI Emerging markets delivered better returns than the domestic FBM KLCI benchmark.
"The diversification across countries and asset classes did well for EPF, especially with the 19.6 per cent growth in returns from the real estate and infrastructure investments portfolio,” he told the New Straits Times yesterday.
On the expected future investment strategies moving forward, Mohd Redza said he believes EPF has a strong team to relook at their investment strategies and to realign based on the changing investment landscape seen currently.
"With the US markets going on a dynamic movement, with bond sell-offs and China’s high debts issues, perhaps there will be some tweaking needed. But I am confident that EPF will do its best to ensure a prudent investment strategy for what has been a challenging start to 2018,” he added.
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the latest dividend by the EPF was a pleasant surprise as it represented the highest rate on record since 1997.
"To a large extent, it was very much in line with the global stock market performance, given that 59 per cent of the total income is contributed by the equity investment.
"More importantly is their diversification strategy into global markets has paid off which is in conformance to their Strategic Asset Allocation (SAA).
"Therefore, every investment decision is very quantitiative in nature in order to get the best possible investment returns with the appropriate level of risks,” he said.
Afzanizam pointed out that the EPF investment processes are very robust and in accordance with international practices.
“In addition to that, the dividend is higher than the level of inflation rate. So the contributors’ savings are always better off.
"Going forward, the investment performance will always be subjected to the prevailing market conditions which tend to have its ups and down in certain times and intervals.
"At the moment, the market is enduring the rising interest rate environment which is essentially a good thing since the economy is relying less and less on policy support in order to grow,” added Afzanizam.