Malaysia’s Employees Provident Fund allocated an additional US$2.15 billion to global equities and US$360 million to global bonds and real estate during the quarter ended June 30, according to an announcement on the EPF’s website.
The latest diversification move marked a pickup from the first quarter, when the EPF announced US$1.3 billion in additional investments in global real estate, bonds and equities.
According to the EPF’s announcement, global assets at the end of June accounted for 19% of total assets “based on book value,” up from 17.6% at the end of March.
In line with Ministry of Finance guidelines, the EPF can invest up to 23% in overseas markets.
Of the US$2.15 billion in global equity allocations, US$1.2 billion was awarded to external fund managers, according to the statement. An EPF spokesman couldn’t immediately be reached for details.
In the statement, EPF CEO Shahril Ridza Ridzuan alluded to the impact of U.S. Fed Chairman Ben Bernanke’s May comments about an eventual “tapering” of Fed monetary stimulus, noting that the resulting movement of capital back to developed markets had weighed on Malaysian equity and bond prices in recent months.
In that regard, “our increased allocation to global assets … will help to balance against any short-term drops in value in the Malaysian markets or in the ringgit, allowing us to better weather volatilities and downside risks,” he said.
The latest quarter saw the EPF’s portfolio grow to 554.14 billion ringgit (US$168.9 billion), up 3.3% from the prior quarter, helped by net inflows from EPF members of 4.15 billion ringgit and investment income of 9.16 billion ringgit.