The Employees Provident Fund (EPF), which has more than 14 million contributors, is expected to announce a dividend of more than six per cent for 2017, said market observers.
They said the returns would be bolstered by the improvements in the performance of local and global equity markets last year.
Malaysia’s largest pension fund, with investment assets valued at more than RM770 billion as at September last year, is due to announce its dividend for 2017 this month.
In 2016, EPF gave out a dividend of 5.7 per cent, lower than the 6.4 per cent in 2015 and 6.75 per cent in 2014.
Jupiter Securities Sdn Bhd director Nazarry Rosli said EPF had the ability to provide a better dividend for 2017 in line with strong domestic and global market performances last year.
He said investment strategies across various asset classes in some countries and markets had enabled EPF to generate better returns.
Nazarry said EPF had a good track record in managing investments to ensure a competitive return every year to contributors.
“I believe EPF can provide a better dividend for 2017 on the back of strong market performances last year,” he told the New Straits Times.
Last year, Bursa Malaysia’s benchmark index, the FTSE Bursa Malaysia KLCI, rose 9.45 per cent or 161.28 points to end at 1,796.81 points.
Market observers said as past records suggested, investments across various asset classes had enabled EPF to exceed a real dividend target of more than two per cent above the inflation rate, which stood at 3.8 per cent last year.
As at September last year, 50.45 per cent of EPF investment assets were in fixed-income instruments while overseas investments accounted for 30 per cent.
Investments in money market instruments and real estate and infrastructure accounted for 3.53 per cent and 4.16 per cent, respectively.
In the third quarter of 2017, EPF’s investment asset value reached RM771.20 billion, 5.48 per cent or RM40.09 billion higher than the RM731.11 billion recorded in December 2016.
During the quarter, EPF’s investment income rose 5.13 per cent to RM12.95 billion from RM12.32 billion a year ago.
EPF’s investment income in the second quarter ended June 2017 increased 36.36 per cent to RM11.51 billion from RM8.44 billion for the corresponding period of the previous year.
In the first quarter ended March 2017, it recorded an investment income of RM11.79 billion, jumping 73.9 per cent from RM6.78 billion in the same quarter of 2016. As at Sept 30 last year, EPF had 17.8 million account holders, including 4.08 million dormant accounts.
Asked whether the dividend amount to be announced by EPF could equal Lembaga Tabung Haji’s hibah amounting to 4.5 per cent and bonus of 1.75 per cent for the financial year 2017, Nazarry said: “It is very possible to at least match the amount.”
Malaysian Trades Union Congress president Datuk Abdul Halim Mansor was hopeful that EPF could provide a higher dividend than the 5.7 per cent announced in 2016.
He said there was a high possibility that EPF would be able to provide higher dividends than TH’s hibah as the former’s investments were more extensive and bigger.