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Pension Funds

Malaysia’s EPF announces 6.9% dividend payout, record gross investment income

Malaysia's Employees Provident Fund reported gross investment income for 2017 of 53.14 billion ringgit ($13.4 billion) and a dividend distribution of 6.9% for the national retirement program's 14.7 million members.

An EPF news release Saturday said the latest gross investment income total, locked in via sales of the portfolio's stock and bond holdings, was the highest for any year since the provident fund's launch in 1951.

The dividend, meanwhile, was the highest since the EPF announced a 7.7% payout to members for 1996.

The EPF dividend payout is one of the most closely watched announcements on the Malaysian financial calendar.

The EPF portfolio's market value ended 2017 at 791 billion ringgit, up 2.6% from the prior quarter and up 8.2% from the prior year.

EPF Chairman Samsudin Osman, in the news release, reiterated the importance of diversifying the fund's portfolio overseas to delivering "consistent and sustainable returns for the long run."

Even so, the Malaysian ringgit's rally vs. other currencies during the latest quarter — including an almost 4% strengthening compared to the U.S. dollar — appeared to dent the fund's gains as the latest year drew to a close.

Reflecting the dollar's weakening, the weight of foreign stocks, bonds and alternative assets in the EPF portfolio slipped to 28% from 30% three months before. For the current quarter, the dollar has continued to weaken, trading on Feb. 9 around 3.96 ringgit, down from 4.06 ringgit at the end of December and 4.22 ringgit at the close of the September quarter.

Mr. Samsudin said the EPF had enjoyed an annualized return on investments of 7.3% over the past three years, which he called "commendable" for a "balanced fund with exposure in fixed income instruments of about 50%."

For the latest year, equities – which accounted for 42.2% of the EPF portfolio – contributed 31.47 billion ringgit to the fund's gross investment income, or 59.2% of the total.

The fund's holdings of Malaysian government securities, loans and bonds, contributed 17.45 billion ringgit in gross investment income, or 32.8% of the total.

The EPF's investments in real estate and infrastructure, at 4% of the portfolio, and money market instruments, likewise at roughly 4%, contributed 6% and 2% of gross investment income respectively.