EPF (Employees Provident Fund) just announced the much anticipated performance to its depositors for year 2020. The results is very much anticipated as year 2020 was a year of turbulence cause by Covid19 pandemic. The performance was expected to be bad however it was quite a surprise.
EPF returns for the conventional fund was 5.2%, way higher than its Syariah equivalent (4.9%). This is very good results considering how bad shape the world economy was due to Covid19. The returns is also lowest compared to the past years returns.
Do note that EPF returns are calculated on daily rest and pro rated, so if your EPF account as of last year 2020 was RM100,000, your returns is not RM100,000x5.2%, it will be less than that amount as the amount contributed is different throughout the year of 2020.
Compared to ASN Amanah Saham family of funds, EPF returns outperformed ASN family of funds. All ASN funds return for year 2020 were below the 5% mark. One of the reasons I believe is ASN funds only invests in Malaysian equities while EPF has a sizable chunk of investments outside Malaysia. Permodalan Nasional the company managing ASN is also aware of this and hence they launch a global balanced fund called ASN Imbang (Mixed Asset Balanced) 3 Global this year.
In additional, EPF returns way outshines and outperform Tabung Haji's returns by a big margin. Returns from Tabung Haji only was 3.1%. The paltry return of 3.1% from Tabung Haji is really at the lower end of returns for such a reputable organization.
In addition, EPF also subscribes to many global feeder funds to diversify its investments, I do know some of EPF money is being pass to Aberdeen Asset Management to manage.
Personally I do withdraw EPF funds to buy unit trusts but only in very severe market conditions do I do that. When I'm withdrawing money from EPF to buy unit trusts I've actually already spotted a rising unit trust that I can profit over a short period of time (country, industry specific). Eg, if Indonesia stocks is being badly beaten down, I will use EPF money buy an Indonesia mutual fund and then sell it off when it rises back to capitalize on the rebound.
For the general EPF depositor it is best to keep your money with EPF and watch it grow over time. Unless really required only should you apply for i-Sinar, i-Lestari for EPF withdrawals. An additional piece of advice also, do not use EPF money to withdraw and then buy cryptocurrency, this is a quick path to financial destruction. Getting a 5.2% returns in the current environment (covid19) is very very hard nowadays.
Sadly enough, EPF in a recent report says that 30% of EPF depositors have nothing left in account 1 while 60% 😲 of depositors will have nothing left in account 2 due to withdrawals, this will create social problems in the future.
⚓ Links
https://www.theedgemarkets.com/article/epf-declares-52-dividend-pandemichit-2020-just-below-545-2019