EPF investments in Colombo bourse continue to plummet

Sri Lanka’s largest state-run private sector pension fund, the Employees’ Provident Fund (EPF), currently has approximately Rs. 1,772 billion of investments in its portfolio, but its investments in the Colombo bourse has declined, the Central Bank disclosed last week.

Responding to a Right to Information request made by Transparency International Sri Lanka Executive Director Asoka Obeysekere, the Central Bank said 93.13 percent of its investments, worth Rs. 1,650 billion, are in government securities.

The Central Bank came under intense scrutiny over the past two years since the EPF did not engage in the primary market for government securities, instead purchased securities at prices higher than the primary market rate from controversial primary dealers.

According to the Central Bank, nearly 4 percent or Rs. 70.58 bllion of the EPF portfolio consists of investments on shares in the Colombo Stock Exchange.

The investments made in shares however have declined over the years, from Rs. 8 .11 billion invested in 2013 to Rs. 4.81 billion in 2014, Rs. 1.27 billion in 2015, and Rs. 1.31 billion in 2016.

Colombo Stock Exchange stakeholders have been rallying for higher level of participation of pension funds in the market to create positive investor sentiment.

Meanwhile, just under 2 percent of the EPF investments are in corporate debentures, while unlisted equities, trust certificates and reverse repo investments make up the remaining minority of investments.

According to the last EPF investment policy statement that has been published, the EPF is to evaluate foreign investments, given the low interest rates which were prevalent during the period of policy formulation, which EPF officials claim was formulated several years ago. A new EPF Investment Policy Statement or EPF annual reports since 2013 have not yet been published.