EPF's diversified investment strategy key element of good returns - Maybank CEO

The Employee Provident Fund (EPF)'s 6.4 per cent dividend, declared for last year, has been described as very good returns amid the tough investment condition, thanks to its diversified investment strategy and asset allocations.

The year 2015 saw the global stock market index (MSCI World) drop 4.3 per cent, global bond index slip 2.7 per cent, FBM KLCI shed 3.9 per cent and the Ringgit depreciate 18.6 per cent against the US Dollar.

"The dividend (by EPF) is well over the 2.1 per cent average inflation rate and 3.3 per cent average 12-month fixed deposit rate in 2015," Group President and Chief Executive Officer of Maybank Datuk Abdul Farid Alias said in a statement to Bernama.

Last Saturday, the retirement savings fund declared a dividend rate of 6.4 per cent for 2015, with a total payout of RM38.24 billion.

The increase was in tandem with the growth in EPF's investment assets, which stood at RM684.53 billion as at Dec 31, 2015, while gross income grew 13.18 per cent to RM44.23 billion compared with RM39.08 billion in 2014.

He attributed the higher dividend payout to EPF's diversified investment strategy and asset allocations, which was key to riding through the volatilities and uncertainties in the global economy and financial markets to derive sustainable growth and returns.

This year will also mark another milestone in EPF as it embarked on the process of establishing a Syariah Fund to be launched in Jan 2017 with RM120 billion initial fund size, said Abdul Farid who is also Chairman of the Association of Banks Malaysia.

Earlier, CIMB Group Chief Executive, Tengku Datuk Seri Zafrul Aziz also said that the dividend payout was a commendable achievement.

He said it was an indication of good and prudent investment management as global markets faced multiple headwinds.

On outlook, Abdul Farid said economic and investment conditions remained challenging this year.

So far into 2016, the global equity index has fallen further by 7.4 per cent while the FBM KLCI was down one per cent. In addition, domestic inflation was expected to accelerate to between 3.0 per cent and 3.5 per cent.

At 12.30 pm today, the FBM KLCI stood at 1,675, up 0.40 of a point from Friday's close of 1,674.88.

Meanwhile, the ringgit is expected to be more stable this year.

Already year-to-date, the local note appreciated two per cent against the US dollar.

At 2pm, the ringgit was trading at 4.2045/2095 versus the greenback.

Abdul Farid said the flipside of this is that the "outperformance" in EPF’s global investment returns, vis-a-vis domestic investments that was partly driven by currency gains following the weaker ringgit against major currencies last year, is a harder act to replicate.