Malaysia’s Employees Provident Fund Continues Overseas Allocation Push

kualaMalaysia’s Employees Provident Fund (EPF) has invested 3.91 billion MYR (US$ 1.29 billion) in overseas investments such as bonds, equities and real estate during the first quarter of 2013. Malaysia’s EPF which is 526.8 billion MYR (US$ 171.2 billion) in size is undergoing a strategy to geographically diversify their investment portfolio. EPF’s long-term diversification strategy has worked. In 2009 5.96% of assets were overseas, and currently the percentage amount is 17.21%. The public fund is permitted to invest up to 23% of assets overseas. The need for diversification is clear; the fund grows at an annual average of 9%.

See the Institutional Investor Profile of Malaysia’s EPF

Increasingly, emerging-market public investors are facing constraints with the investment universe of their domestic market. As these public funds radically augment in asset size, they tend to distort local capital markets – many which have relatively little liquidity compared to developed markets. The same is occurring with several large Latin American pension funds.

Malaysia’s EPF allocates around 11% of assets to external managers.

In mid-April 2013, Datuk Shahril Ridza Ridzuan took position as chief executive officer of the Employees Provident Fund for a two-year term. Previously, he was deputy chief executive officer being responsible for the fund’s investment policies and strategies. Tan Sri Azlan Zainol had served as chief executive officer since April 16, 2001.

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