EPF: Investing direct, 5.7 pct dividend versus 6.4 pct in 2015.

Do you know that it’s possible to buy and own your own plantation land? Well, orchards for a start? Many years ago, a group of friends and I wanted to buy a durian orchard.Somehow we did not and look at today’s price for Musang King and I am close to fainting. Haha… Anyway, it’s ok lah. Our Employees Provident Fund (EPF) is exploring opportunities to invest more directly into natural resources assets and not just as a shareholder. For example, owning some plantation assets directly. Of course to do this well, it has to be huge enough so that a management team can be set up to manage this. I think these days, it’s quite normal to see EPF taking huge stakes in some huge property developments. From within Malaysia (BBCC) all the way to London (Battersea), EPF is already quite proactive. I think the current CEO has steered it quite well. He shared that EPF has been gradually gradually diversifying away from pure fixed income and private equity investments in the last few years and expanded its real estate and infrastructure portfolio. For example, EPF was already one of the largest investors in palm oil companies though they have no direct assets yet.
As for 2016, the dividend declared was 5.7 percent. This is lower than the 6.4 percent declared for2015. Yes, I personally think 5.7 percent is an encouraging number. This is still higher than the sudden ‘highest’ number for inflation just recently which was higher than even the usual fixed deposit rates here in Malaysia. With the unemployment rate continue to be low and with more people having higher salaries, the contributions into the fund is on an increasing trend. EPF recorded an annual contribution of RM61.59 billion versus RM46.8 billion withdrawals. So, yes, it is still growing. I think this will be under more pressure in the future when Malaysia becomes an ageing nation. Probably 2035 based on estimates. In terms of numbers, last year the EPF had a gross total of RM46.56 billion invested and it achieved a gross income return on investment of 7.12 per cent. This was lower and a few reasons contributed to this. The slump in crude oil prices, weaker ringgit and corporate earnings, as well as large-scale withdrawals of capital from emerging-market economies into developed countries. (The last reason has big effects on the ringgit)
Happy following.
written on 23 April 2017
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