Malaysia’s EPF to hike investments in real estate, infra & private equity in five years

EPF chief executive officer Shahril Ridza Ridzuan

Malaysia’s Employees Provident Fund (EPF) has set its sights on growing its real estate and infrastructure as well as private equity investment exposure to between 8 per cent and 10 per cent of the fund’s total assets under management (AUM) in the next five to seven years.

Currently, the pension fund’s real estate and infrastructure spread is at 3 per cent.

In a media briefing elaborating the fund’s performance for 2015 and dividend payout, chief executive officer Shahril Ridza Ridzuan said, real estate and infrastructure assets make a great asset class to hold in the long term, complementing EPF’s investment horizon.

“Over the long term, we believe that we can grow the non-market-listed to roughly about 8 to 10 per cent of our AUM. At the point of time, it is basically a growing fund so we are not static in terms of the amount of money we are putting in,” he told reporters.

Ridzuan added that the speed of growth for this asset class will naturally not be as fast as market-driven or market-priced assets is because of the level of due diligence required for each of the acquisitions.

“We are building this as per the capacity required internally,” he said.

Ridzuan commented that EPF had remained fairly prudent in its investment approach throughout the last year, with slightly more than half of its assets in fixed income.

“This protects the capital and maintain the minimum dividend. Whereas the equities and real estate portion protects us against inflation,” he said.

EPF 2015 inv asset chart

The pension fund recorded a gross investment income of MYR44.23 billion in 2015, breaching the MYR40 billion mark for the first time despite the challenging and volatile economic environment. In 2014, the fund recorded MYR39.08 billion.

Gross investment income was 13.2 per cent higher than what was achieved in 2014. On Saturday, the fund announced a dividend payout of 6.4 per cent, the highest to date, totalling $9.09 billion.

EPF 2015 inv inc

EPF’s view on 2016 is cautious, noting continued challenging economic climate.

The fund will also maintain the consistency of its strategic asset allocation, with fixed income assets making up the bulk of the fund’s investments, followed by equities.

“In terms of our strategic asset allocation, when we report to you this time next year, I wouldn’t expect our splits between fixed income, equities and the rest will shift that much. However, during the year, we may shift, between different asset classes, one to two percentage points,” he said, noting that the fund may do more trading, to offset the economic volatility.

EPF 2015 inv asset class

Also read:

Malaysia’s EPF declares 6.4% dividend, total payout of $9b

Malaysia: EPF records investment income of $2.27b for 3Q15 amid volatile market

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.