KUALA LUMPUR The Malaysian Employees Provident Fund plans to invest an additional 2.2 billion ringgit ($584 million) with external portfolio managers during the second quarter.
In anticipation of the move, the Malaysian Securities Commission granted BNP Paribas a foreign fund manager license. The EPF, which had 285.96 billion ringgit at year end, is expected to allocate an unspecified amount to BNP after the firm opens an office in Kuala Lumpur in June, said an EPF source.
Paris-based BNP is one of two financial institutions that have sought foreign fund managers licenses in Kuala Lumpur, according to the source. The other firm has not been identified pending its approval.
At the end of March, EPF Chairman Samsudin Osman announced the fund was planning to allocate 1 billion ringgit to equity and fixed-income managers in the second quarter of this year. He had then expected the securities commission to approve two fund managers licenses.
BNP Paribas will be joining some of the leading players in Malaysian fund management, including Nomura Asset Management (Singapore) Ltd., Pheim Asset Management Sdn. Bhd., SBB Asset Management Sdn. Bhd. and AmInvestment Management Sdn. Bhd.
The EPF has obtained Finance Ministry approval to invest an additional 3.5 billion ringgit in listed equities of selected developed markets.
This is in line with its effort to seek new investment opportunities via its overseas investment program to meet the growing size of the fund, as well as improve its risk-return profile, according to an EPF statement.
With this new approval, the total funds allocated for investment in overseas equities has reached a total of 7 billion ringgit, representing 2.5% of the EPFs total assets. The EPF is expected to grow to 319 billion ringgit by the end of this year.
The EPF is expanding its investment portfolio and is also expecting approval from the Securities Commission to invest in global bond markets.
According to Mr. Samsudin, the EPF has already invested a significant amount of funds in a number of approved global equities market, through internal portfolio managers as well as outsourcing to external portfolio managers.
Thus far, the total size of funds invested in foreign equities is 4.4 billion ringgit, he said.
With the securities commissions approval for the additional foreign fund managers license in the near future, the balance of the allocation will be fully invested, he said.