Strategic Asset Allocation Ensures EPF Dividends Remain Competitive - Economists

KUALA LUMPUR, Feb 28 (Bernama) -- The Employees Provident Fund (EPF) dividend rate for 2026 is expected to remain competitive, driven by the fund’s strategy based on its Strategic Asset Allocation, according to Prof Dr Ahmed Razman of Universiti Putra Malaysia.

The Putra Business School Master of Business Administration programme director said that based on the EPF’s presentation, the fund’s asset allocation focuses on investments that can generate returns that are more stable and less exposed to foreign exchange (forex) fluctuations.

“Based on what was announced, there was a slight increase in private equity investments as well as a greater focus on international investments.

“This is one of the risk diversification strategies so that the ringgit’s movements do not have a significant impact on dividend rates from year to year,” he told the media after the EPF 2025 dividend announcement today.

Earlier, EPF chief executive officer Ahmad Zulqarnain Onn said the ringgit’s strengthening against the US dollar, as well as the FTSE Bursa Malaysia KLCI’s moderate performance last year, were among the main factors contributing to the decline in the dividend rate to 6.15 per cent for the 2025 financial year from 6.3 per cent in the preceding year.

He said the strengthening of the local currency had a direct impact on overseas investment returns denominated in US dollars when translated back into ringgit.

“When the ringgit strengthens against the US dollar, overseas investment returns are translated into a lower value in ringgit terms,” he told a media conference to announce the EPF’s 2025 financial performance here today.

For the year ended Dec 31, 2025, the EPF recorded total distributable income of RM82.7 billion, an increase of 9.5 per cent compared to RM75.5 billion in 2024.

Investment assets grew to RM1.41 trillion, up 12.8 per cent from RM1.25 trillion, driven by portfolio income and net contributions of RM66.5 billion.

Despite the increase in income, the dividend rate was lower due to forex translation and moderate market performance throughout the year.

Meanwhile, economist Prof Dr Barjoyai Bardai said the EPF continued to expand its investments to balance between fixed-income assets and equities, including investments in high-potential businesses.

“This approach can help the EPF generate more sustainable income in the long term,” he said.

Equities remained the main contributor in 2025, generating RM50.7 billion or 64 per cent of the EPF’s total investment income.

“This surpassed the RM49.9 billion recorded in 2024, while the return on investment (ROI) moderated to 7.9 per cent amid global market volatility and slofter domestic market conditions.

“Private equity investments, which represent around eight per cent of equity investments, recorded an ROI of 10.5 per cent,” Ahmad Zulqarnain said.

-- BERNAMA