Dividend payouts ‘exceed expectations’
The Employees Provident Fund’s (EPF) dividend payouts of 6.9 per cent and 6.4 per cent to its conventional and syariah funds have “exceeded expectations”, research houses and analysts say.
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 EPF, a prudent one, and also reflects good governance in safeguarding returns and ensuring 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 Sunday Times yesterday.
On the expected future investment strategies, Redza said he believed EPF had a strong team to relook at its investment strategies and to realign them based on the changing investment landscape.
“With the United States markets going on a dynamic movement, with bond selloffs and China’s high debts issues, perhaps some tweaking will be 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 the year.”
Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the payout was a pleasant surprise as it represented the highest rate on record since 1997.
“It was 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, its diversification strategy into global markets has paid off, which is in conformance with its strategic asset allocation.
“Every investment decision is quantitative in nature to get the best possible investment returns with the appropriate level of risks.”
Afzanizam said EPF’s investment processes were robust and in accordance with international practices.
“The dividend is higher than the inflation rate.
“So, contributors’ savings are always better off.
“Going forward, the investment performance will be subject to the prevailing market conditions, which tend to have their ups and downs in certain times and intervals.
“At the moment, the market is enduring the rising interest rate environment, which is a good thing since the economy is relying less and less on policy support to grow,” he said.