2nd EPF!

The move to allow EPF members to buy only funds with a track record of at least three years has drawn mixed reactions.

Effective August, funds with a less than a three-year performance track record as well as newly launched ones will not be sold to EPF contributors. The new rulings also reinstated a previous move to allow EPF members to invest in funds with foreign exposure, but now with a limit of up to 30%.

The Federation of Investment Managers Malaysia (FIMM) recently said the reason to allow EPF members to invest in performing funds — those that have higher consistent returns for at least three years, was to strengthen trust and confidence in unit trust investment.

That was a fear that with the three-year track performance ruling, members might lose out as good investment “windows” did not last that long especially true for “thematic” investments. Thematic investing is an approach that seeks to identify and capitalise on economic, political, and social trends that are likely to have significant implications on important sectors of the economy and financial markets.

However the move is considered a good one as the three-year performance time frame would help investors choose funds that perform consistently and eliminate those that underperform. Just be warned that the selection criteria may lead members to focus too much on the past performance of a fund which may not necessarily be indicative of future performance.

There are other factors to consider in choosing the right investments, such as risks profiling, time horizon, qualitative factor and others

Diversified From EPF to Unit Trust

Significantly larger number of EPF members withdrew part of their retirement savings for investment in unit trusts.

The amount withdrawn under Members’ Investment Withdrawals in first quarter of 2010 (Q1 2010) increased by 43.26 per cent to RM911.15 million (Q4 2009: RM896.66 million) from RM636.01 million withdrawn in the corresponding period in 2009. Total applications approved under this withdrawal increased to 113,809 (Q4 2009: 114,375) from 87,420 in the same period last year.

The increase in withdrawals for investments is in tandem with the recovery in the domestic economy that began in the third quarter of 2009 and has since continued to gain momentum. The increase was also attributed to the rise in the number of members who are eligible for investment withdrawals.

EPF's Top 30 Equities

EPF will publish its Top 30 equity investments in companies listed on Bursa Malaysia on a quarterly basis. Members could see from the website which companies their savings were invested.

The investment highlights can be viewed at www.kwsp.gov.my. As of March 31, the EPF’s top three shareholdings were 67.33% stake in Malaysian Building Society Bhd, 56.14% of RHB Capital Bhd and 41.54% of Malaysian Resources Corp Bhd.