EPF to set up investment in private assets to 15 pct of AUM — CEO

KUALA LUMPUR: The Employees Provident Fund (EPF) aims to grow its investment exposure in private assets to 15 per cent of its total assets under management (AUM) from five per cent now as its strategic medium-term investment move.

EPF Chief Executive Officer (CEO), Datuk Shahril Ridza Ridzuan, said the fund was committed to finding the right assets to match the profile that could deliver an inflation-adjusted investment to its members.

“Those private asset investments shall include infrastructure, property and private equity.

“EPF’s strategy is always about diversification of its assets and the market that it entered in order to provide a more stable returns for the members, as our target for members is always to reach (rate of return above) inflation plus two per cent,” he said.

He said this as one of the panellists at ‘Planery 4: Plans to raise returns for shareholders’, at Invest Malaysia (IM) 2017 here yesterday.

Shahril said it was important for the EPF members to understand that the inflation was basically the key matrix used by the fund for measurement of success because the fund always wanted to make sure that there were real growth in the assets it managed.

“The target is always above inflation plus two. Historically, the range of return by EPF was always between the inflation rate plus two and by inflation plus four. EPF is a long-term fund that focused on stabilised, long-term returns,” he said.

He said the whole idea was to encourage saving for long term rather than spending the saving on short term.

“Saving on EPF is for long-term retirement and not suppose to be used for consumption during working life,” he said.

Another panellist, CEO from Malaysia’s second largest retirement fund, Kumpulan Wang Persaraan (Diperbadankan), or Retirement Fund Inc (KWAP), Datuk Wan Kamaruzaman Wan Ahmad, said there were there still a lot of ‘gems’ out there at Bursa Malaysia.

“From the last three years of downturn of performance, the market now is at its first year of upturn and it is still probably a long way to go, with some companies in certain sectors, including the finance sector, are still relatively cheap.

Wan Kamaruzaman said KWAP’s investment was guided more by its asset allocation principle and the fund sometimes stayed on investing in certain company not by choice, but because it got stuck due to market liquidity issue.

“Data had shown that good corporate governance companies had always outperform others and able to give better returns,” he said.

Meanwhile, Permodalan Nasional Bhd’s President/Group CEO, Datuk Abdul Rahman Ahmad, said the company has always refer to the core fundamentals in its investments.

“Valuation sometimes is only relative. The key is effectively more on the underlying profitability and on the return on equity (ROE).

“Corporate in Malaysia has to always focus on ROE and the underlying profitability to make sure it can sustain better share price,” he said.

Invest Malaysia 2017, organised by Bursa Malaysia Bhd and CIMB Investment Bank as the co-organiser, has attracted over 900 fund managers with total AUM of US$19.9 trillion (US$1 = RM4.28), a significant increase from US$11 trillion last year. — Bernama