Thursday, February 21, 2013

EPF risk profile has changed

The investment returns for the last few years certainly had been tough for many fund managers. EPF has done well navigating the turbulent investment sea for the last few years. Fair is fair. Here are the dividend rates for the last few years:

2012 6.15%
2011 6.00%
2010 5.80%
2009 5.65%
2008 4.50%

How did they did it? First, note the asset under management. It has grown from slightly more than RM 300 billion to over half-a-trillion. While the assets under management has grown by more than 60%, I am glad to see they held MSG, loan and bond and properties relatively constant. Thus almost constant in dollar but shrinking % to total assets. That is a consolation at least our money did not gone into more and more wasteful mega projects. 

The obvious uptrend is equities exposure. As a percentage, it has grown from 20% to about 40%. Equity has grown from RM 87 billion to almost RM 204 billion, slightly more than double. Like I said, I would rather to see them invest in companies rather than putting more money into bond. EPF's equity position of RM 204 b over RM 1.2 trillion[total bursa market cap] is about 17%.  17% is high but not that alarming yet. Members need to be aware of this composition and any down year in equity market will have an impact on dividend payout but I hope 4.5% would be the minimum. 

The reason I point out this shift is to alert people who are making argument based on old facts to get updated   and argue their case ( personal finance planning, policy debate, etc) intelligently. 

No comments: