Ringgit slide has little impact on EPF assets, says fund chief

Ahmad Zulqarnain Onn said EPF is acquiring more assets in ringgit because it is undervalued.

KUALA LUMPUR: EPF’s assets are not affected by the ringgit’s weak performance because they are diversified, its CEO, Ahmad Zulqarnain Onn, said.

“Our strategy has also been driven by asset allocation and diversification. If you look at our portfolio, it’s incredibly diversified. They are spread across the globe,” Zulqarnain said at a press conference during the release of the fund’s 2023 results today.

He also said EPF’s strategy is on long-term investments, and temporary changes in the market have no significant impact.

“If you are able to invest for the long term, you will find that over a long period of time, things start to cancel each other out. We are not worried about short-term changes in every asset price,” he said.

On Feb 20, the ringgit fell 0.2% to 4.7965 against the US dollar, reaching its weakest level since an all-time low of 4.8850 in 1998, during the Asian Financial Crisis.

The ringgit’s dismal performance had led Bank Negara Malaysia to say the currency is presently undervalued as the country’s economic fundamentals and prospects are still positive.

Zulqarnain agreed with BNM, saying EPF is purchasing more assets in ringgit.

“Our house feels that it’s undervalued. When something is undervalued, we will take profit by purchasing more,” he said.

New EPF scheme for civil servants

On a separate matter, Zulqarnain said the government’s proposal to abolish the pension scheme for new civil servants will not affect EPF’s asset allocation.

He said the government expects to recruit about 30,000 civil servants a year, but this number will have little impact on EPF’s present 16 million members.

“Considering that this policy will only affect new civil servants, their income will be relatively lower, so the amount to be managed is quite small,” he said.

Last month, deputy prime minister Ahmad Zahid Hamidi said the government was scaling back the civil service pension fund, and new recruits would instead make contributions to EPF and the Social Security Organisation.

He said this would alleviate the government’s financial burden, adding that the new policy will be implemented by this year.