EPF outsourced RM114.5bil to external managers last year

PETALING JAYA: The Employees Provident Fund (EPF) outsourced RM114.56bil to external portfolio managers last year, an increase of almost 10% from 2016.

The provident fund said the allocation was invested in equities and fixed income instruments, representing 14.5% of its total investment assets in 2017, almost doubling the amount from five years ago.

“As we gear up towards becoming a trillion-ringgit fund, we will continue to outsource a portion of our funds as part of our diversification initiative, and to suitably leverage on the knowledge and skill sets of external fund managers that complement our own internal fund-management capabilities,” EPF chairman Tan Sri Samsudin Osman ( pic) said in a statement.

He said the provident fund would also continue to increase investments, especially in alternative investments and infrastructure.

“However, taking into account the prevailing market volatility and subdued growth, our expansion will be done gradually and in a prudent manner,” Samsudin added.

As at Dec 31, 2017, the size of the EPF’s investment assets had increased 8.25% to RM791.48bil.

The EPF said it had paid almost RM310mil in management fees last year, which represents a 6.5% increase from RM291mil a year earlier due to higher outsourcing of funds to external fund managers.

The country’s second-largest pension fund, Retirement Fund Inc (KWAP), last year also allocated about 15% of its investment asset amounting to RM17bil to external fund managers.

Samsudin said about 45% of the EPF’s investment assets are syariah-compliant and the fund expects to grow this asset class by at least RM25bil a year to meet the demand of its members.

He noted that the competition for high-quality Islamic assets was not only confined to investors in the Muslim world, but to the Western pension funds as well, given the attractiveness of Islamic assets as an alternative and ethical source of financing.

“The EPF needs more quality Islamic assets to invest in, and we welcome external managers to join us in our commitment to growing our syariah mandate,” he added.

On Monday, the EPF dished out 14 awards to its external fund managers in recognition of their performance.