EPF div­i­dend for 2016 to re­flect mar­ket con­di­tions

The Borneo Post - - HOME -

KUALA LUMPUR: The Em­ploy­ees Prov­i­dent Fund ( EPF) is ex­pected to an­nounce its full-year div­i­dend for 2016 this week­end.

For 2015, the pen­sion fund de­clared a div­i­dend of 6.4 per cent which amounted to a to­tal pay­out of RM38.24 bil­lion.

For 2016, the div­i­dends will surely re­flect the weak sen­ti­ment in the do­mes­tic and for­eign eq­ui­ties mar­kets.

Al­most ev­ery pen­sion and in­vest­ment fund suf­fered from the ad­verse ef­fects of the steep fall in crude oil prices to his­tor­i­cal lows of US$ 28 ( US$ 1 = RM4.44) per bar­rel in Jan­uary, the marked de­pre­ci­a­tion of the ring­git and ‘British exit’ ref­er­en­dum woes.

EPF was not spared as it was a ma­jor in­vestor in Bursa Malaysia with a sig­nif­i­cant weigh­tage in bank­ing, plan­ta­tion and oil & gas stocks, which suf­fered se­vere losses.

The EPF can be ex­pected to de­clare a div­i­dend rate of close to six per cent de­spite th­ese chal­lenges.

Mar­ket an­a­lysts said this would be a de­cent re­turn to the con­trib­u­tors.

The fund’s fore­sight in pur­su­ing di­ver­si­fied port­fo­lio in­vest­ments that in­cluded for­eign as­sets put it in good stead to reap de­cent re­turns like last year de­spite the odds.

An­a­lysts say EPF’s div­i­dend would be rel­a­tively bet­ter than other do­mes­tic funds, driven by its for­eign as­sets which, al­though con­sti­tute 28-29 per cent of its in­vest­ment port­fo­lio, would ac­count for 39- 40 per cent of the in­come.

In short, over­seas in­vest­ments con­tin­ued to en­hance re­turns.

When one looks at funds world­wide, get­ting yields is ba­si­cally a ma­jor chal­lenge amid a low growth and low in­ter­est rate en­vi­ron­ment.

Nev­er­the­less, in terms of con­sis­tent short- and long-term re­turns, an­a­lysts say very few ac­tu­ally beat EPF be­cause it didn’t have a neg­a­tive year.

While the first quar­ter of 2016 was a pretty dif­fi­cult pe­riod for eq­ui­ties, the econ­omy started to turn around in the se­cond half and con­se­quently, third- quar­ter fi­nan­cial re­sults for EPF picked up.

The fourth- quar­ter re­sults would be an­nounced at a press con­fer­ence on Mon­day along with the full-year re­sults af­ter the div­i­dend an­nounce­ment over the week­end.

Iron­i­cally, while it was an alarm­ing last quar­ter given that then Pres­i­dent- elect Don­ald Trump’s pen­chant for con­tro­ver­sial state­ments, the US mar­kets ac­tu­ally rose which helped boost EPF’s global op­er­a­tions and in­come.

At­trac­tive eq­uity mar­kets where EPF reaped sta­ble re­turns through in­vest­ments in prop­erty de­vel­op­ment and in­fra­struc­ture stocks in­clude the US, UK and Europe.

EPF’s gross in­come for 2016 would be higher than in 2015, ac­cord­ing to an­a­lysts, but be­cause Bursa Malaysia took a beat­ing last year, EPF raised its pro­vi­sions for eq­ui­ties in Malaysia.

Un­der­stand­ably, con­trib­u­tors have to ac­cept that de­clin­ing div­i­dends would be the ‘ new nor­mal’ given the con­di­tions last year.

Con­trib­u­tors still have the trust in EPF which, be­sides a high level of ser­vice, has al­ways ex­er­cised pru­dence in its in­vest­ment with secure as­sets a core in­gre­di­ent of its over­all port­fo­lio.

A cus­tomer sat­is­fac­tion sur­vey con­ducted a few years ago showed that 94.74 per cent of EPF’s cus­tomers were sat­is­fied with its ser­vices.

As such, what­ever the div­i­dend an­nounced by EPF this week­end would be one that is re­al­is­tic based on mar­ket con­di­tions and takes into ac­count the in­ter­ests of its con­trib­u­tors. — Ber­nama

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