Di­ver­si­fied, over­seas in­vest­ments yield bet­ter re­turns, says EPF

New Straits Times - - Nation/News - AYISY YU­SOF KUALA LUMPUR ayisy@nst.com.my

MALAYSIA should di­ver­sify in­vest­ments not only in the coun­try but also over­seas to reap bet­ter yields, said the Em­ploy­ees Prov­i­dent Fund (EPF).

EPF deputy chief ex­ec­u­tive of­fi­cer of in­vest­ment Datuk Mo­hamad Nasir Ab Latif said it was im­por­tant for the pen­sion fund man­ager to not “put all eggs in one bas­ket”.

EPF’s to­tal as­sets in­vest­ments are worth US$180 bil­lion (RM754.11 bil­lion), with the fund ranked sev­enth in the world.

Nasir said EPF’s cur­rent over­seas in­vest­ments in 40 coun­tries amounted to US$52.2 bil­lion, rep­re­sent­ing 29 per cent of its to­tal in­vest­ment as­sets.

“In­vest­ments over­seas are a must for EPF. We gar­ner be­tween 11 and 12 per cent an­nu­ally for our to­tal as­set growth, which is equiv­a­lent to be­tween RM50 bil­lion and RM60 bil­lion,” he said yes­ter­day.

Nasir said Malaysians should not be wor­ried about EPF’s in­vest­ments abroad, as it was bet­ter for the fund to have di­ver­si­fied in­vest­ments.

“For ex­am­ple, the Canada Pen­sion Plan has more than 90 per cent of its to­tal in­vest­ments over­seas. From our ex­pe­ri­ence dur­ing the Asian fi­nan­cial cri­sis in 1997, we had all our in­vest­ments in Malaysia. The value of most of our as­sets and in­vest­ments plunged vig­or­ously. Thus, we do not want it to ever hap­pen again,” he ex­plained.

Nasir pointed out that the coun­try’s gross do­mes­tic prod­uct (GDP) growth was about five per cent, thus it was vi­tal for EPF’s funds to snow­ball vig­or­ously with bet­ter in­vest­ment op­por­tu­ni­ties over­seas.

“It is not safe for us to in­vest all our money in one place. If any­thing hap­pens, it would af­fect ev­ery­thing. There would be no chance for growth if we con­tinue to rely on in­vest­ments in the lo­cal mar­ket. For ex­am­ple, in the lo­cal bourse, not many com­pa­nies have is­sued ini­tial pub­lic of­fer­ings,” he said.

He stressed that over­seas in­vest­ments would al­low EPF to have wider op­por­tu­ni­ties, with the po­ten­tial of hav­ing in­vest­ments for big­ger as­sets.

“Over­seas in­vest­ments are yield­ing bet­ter re­turns and have less risk pro­file,” he said, adding that for the past three years, EPF’s as­sets in for­eign coun­tries and the re­turns had been grow­ing at a healthy pace.

He said it would be dif­fi­cult for EPF to in­vest all of its money in Malaysia as the lo­cal mar­ket had lim­ited in­vest­ment op­por­tu­ni­ties.

“The bulk of our money, or 71 per cent, is still for lo­cal in­vest­ments. The re­main­ing 29 per cent is for for­eign in­vest­ments.”

Nasir said EPF’s to­tal for­eign in­vest­ments in 2014, 2015 and 2016 had been grow­ing at 23, 25 and 29 per cent re­spec­tively.

How­ever, EPF’s over­all in­come con­tri­bu­tion recorded 32 per cent in 2014, 48 per cent (2015) and 39 per cent (2016) re­spec­tively.

“Al­though over­seas in­vest­ments are less, the re­turns are sub­stan­tial.

“We want to make sure that we can pro­vide bet­ter re­turns to our con­trib­u­tors,” he said, not­ing that over­seas in­vest­ments and di­ver­si­fi­ca­tions were the right mea­sures to take.

Out of EPF’s to­tal in­vest­ments over­seas, 17 per cent is de­rived from its in­vest­ments in the United States, com­pris­ing var­i­ous as­set classes, in­clud­ing equity, real es­tate, in­fra­struc­ture and fixed in­come.

Nasir said EPF’s in­vest­ment ob­jec­tive was for bet­ter re­turns, div­i­dends and cap­i­tal gains, spurred by its mas­sive as­sets to se­cure sub­stan­tial in­vest­ments.

Datuk Mo­hamad Nasir Ab Latif

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