Malaysia’s Employees Provident Fund (EPF) has increased its overseas investments to one-fifth of the fund’s total assets and rebalanced its portfolio, cutting its holdings of bonds and boosting its allocation in real estate, infrastructure and private equity.
The $180bn (€130bn) retirement fund said its annual return on investment (ROI) reached 6.97%, last year helped by “an increasingly globally diversified portfolio”. In 2012, ROI was 6.87%.
Investments abroad accounted for 21% of total assets in 2013, compared with 17% a year ago, according to its annual report.
“Over the last few years, we have begun to focus on real estate and infrastructure investments that meet our risk/reward criteria while also progressively stepping up our participation in the private equity space,” the EPF said.
The fund said it allocated an additional 1bnMYR (€221m) to external fund managers last year. With the added funds, total book value of its assets with external fund managers reached 72.5bnMYR, or 13.46% of the total, up from 56.3bn in 2012. Last year total assets increased by 11.4%.
“Our global exposures are also beneficial during periods of ringgit weakness as they provide a buffer to our earnings,” the EPF said.
“On the regional and global fronts, the financial landscape is anticipated to take an interesting turn, though possibly fraught with challenges.”
The fund added that rising bond yields caused by the gradual withdrawal of the US quantitative easing programme will impact the domestic bond market. More than 40% of Malaysian government securities are held by foreign participants.