Image Sources: KWSP
The country’s largest pension fund is investing more overseas as it seeks to beat the 4% to 5% return it has been achieving.
The Employees Provident Fund (EPF) with about US$216 billion in assets has been expanding its global portfolio to maintain high dividends for workers in the face of limited opportunities onshore, CEO Alizakri Alias said in a Bloomberg TV interview.
“The rate of growth for our fund is outgrowing the rate of the economic growth of Malaysia,” he said on Tuesday. “So whether we like it or not, we have to start looking overseas.”
The state fund currently has almost 30% of its investments placed overseas. Its assets rose 10.9% last year to RM924.75 billion as of the end of 2019.
Malaysia is teetering on the brink of a recession while the government faces risks of a credit ranking downgrade after S&P Global Ratings and Fitch Ratings lowered their outlook to negative.
The World Bank cut its forecast for the economy to a 3.1% contraction this year, from a 0.1% decline, as the coronavirus pandemic and a nationwide lockdown curbed economic activity.
So that, EPF will also invest as much as possible into shariah-compliant assets as well as environmentally and socially responsible assets, even if the supply remains limited, he said. These assets fit the fund’s profile as they are less volatile and focused more on fundamentals and long-term sustainability, he added.
Information Sources: FMT News