SHAH ALAM (May 8): Prime Minister Datuk Seri Anwar Ibrahim has called for the Employees Provident Fund (EPF) to aim for the retirement fund to shift its investment portfolio to comprise 70% domestic investments by year-end, especially in strategic infrastructure.

Officiating the opening ceremony of Menara KWSP on Monday (May 8), Anwar said that the EPF’s investments in the country are currently high, at 66% of its portfolio.

“I see that the EPF investment in the country is quite high and I hope it could reach 70% by this year,” Anwar urged in his keynote address.

While the government is calling for the EPF to shift its investment portfolio to have a bigger weightage on domestic investments, the retirement fund’s foreign investments provide higher returns compared with its domestic investments.

As at end-2022, despite its foreign portfolio only comprising 36% of the fund’s total assets under management, it accounted for 45% of its gross investment income of RM55.33 billion. In 2022, EPF’s foreign portfolio provided a return on investment (ROI) of 9.27% — well above the fund’s overall ROI of 6.5%.

For 2022, the EPF reported an annual return of 5.35%, versus 6.1% in 2021 and 5.2% in 2020.

The EPF had been growing its overseas portfolio over the years. In 2011, the fund had just 13% of its portfolio invested overseas. This then increased to 20% in 2013 and 28% in 2017, before reaching 32% in 2020.

Back when the EPF announced its 2022 dividend rate in March, the fund said its diversification into foreign assets and currencies allowed it to realise additional gains with profits from non-ringgit sources and added value to the retirement fund’s overall returns.

As at end-2022, the EPF had RM1 trillion in assets under management. Fixed income assets made up 47% of the assets, followed by equities with 42%. The EPF had 7% of its assets in real estate and infrastructure investments as of end-2022, while investments in money market instruments constituted 4% of its total assets under management.

The EPF closed 2022 with total gross investment income of RM55.33 billion, of which RM30.54 billion was derived from its investments in equities, RM18.19 billion in government securities and bonds, RM5.56 billion in property and infrastructure, and RM1.04 billion in money market instruments

“Look at the needs of the country now; consider the needs of the people. The investments need to be strategic, not only in industries but also in strategic infrastructure — like with the PLUS Highway and the SMART Tunnel,” said Anwar during the launch.

The prime minister said he had discussed with the EPF, as well as Khazanah Nasional Bhd that the funds should identify a new direction to ensure that they not only make necessary and strategic investments for the nation, but also upskill the young.

“We need to expand the investment framework; for example, there should be investments for start-ups, the young, new industries, and the agricultural sector in terms of food security,” he said.

However, Anwar assured there is no interference with the EPF’s investment affairs under his administration, in a veiled hint at prior instances of government interference in the past.

“This is important because the investment panel must remain independent and professional, that makes decisions based on the needs of the EPF and its members,” he explained.

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