EPF says trading is normal practice, mindful of market impact

by AZREEN HANI/ FILE PIX

THE Employees Provident Fund says it is not extraordinary for the fund to look out for opportunities to acquire as well as sell assets.

EPF added that it will take all necessary measures to ensure its liquidity remains strong and resilient.

“With regards to the sale of assets under these extraordinary circumstances to ensure that there is a cash buffer to meet the needs of all our members, especially to prepare for the iSinar facility to assist members who are severely impacted by the COVID-19 pandemic, the fund will take all necessary measures to ensure our liquidity remains strong and resilient,”  it said in a statement today.

“The EPF always makes investment decisions based on the Strategic Asset Allocation (SAA) framework, which optimises returns within the tolerable risk limits. Despite the current market volatility, we are taking all opportunities to realise profit and to invest in good assets with acceptable risk adjusted returns,” it added.

“We are guided by our SAA to ensure we meet our risk adjusted return. With our significant presence in domestic market, we are mindful of any market impact.”

The EPF is the single largest investor in the local equity market.

The Malaysian Reserve reported yesterday that the fund will be forced to liquidate its assets and rebalance its portfolio to make billions of ringgit in funds available to depositors in need of cash to buffer the economic impacts of the Covid-19 pandemic.

It is estimating that both its i-Lestari and i-Sinar emergency schemes will see roughly RM45 billion pulled out by the end of next year, as eligible members are granted early access to their retirement savings.

Additional reductions in the contribution rate over the past eight months have seen the EPF lose another RM8 billion in opportunity cost for 2020 and a further RM9 billion estimated for 2021, bringing the total cash flow implication on the pension fund to RM60 billion.

EPF CEO Tunku Alizakri Raja Muhammad Alias did not provide details about the liquidation plan but said the fund would look at assets that “best suits” its long-term strategy.

Chief investment officer Rohaya Mohammad Yusof said the asset sell-off plan had been put in motion since March to ensure that the EPF had sufficient funds early on.

 

Read our previous report here