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EPF expects to increase global sukuk mandate to US$1.75 bln

Posted on October 19, 2011, Wednesday

KUALA LUMPUR: The Employees Provident Fund (EPF) expects to increase its global sukuk mandate to US$1.75 billion.

Its general manager for treasury, Wan Kamaruzaman Wan Ahmad said the global sukuk fund, coming from Malaysia and Middle East countries, started with a fund size of US$650 million at its launch in October last year.

On the US$1.75-billion global sukuk fund, he said, US$1.38 billion was outsourced to fund managers with the balance being managed internally.

As for the Malaysian sukuk market, the EPF, he said, would be projecting to increase the size of the Malaysian government and corporate sukuk fund to between RM88 billion and RM90 billion by year-end, from RM27 billion in 2006.

This, he added, would make the EPF one of the biggest investors locally in the sukuk market.

“We are looking abroad at asset diversification to have more exposure in overseas markets,” Wan Kamaruzaman said during the IFN 2011 Issuers and Investors Asia Forum yesterday.

He said the EPF would be considering to increase its overseas asset allocation to 20 per cent of total portfolio within the next two to three years, when the global economic situation had improved from the present 12 per cent.

“We are keen on sukuk, property and equity,” he added.

In respect of the EPF global sukuk mandate, Wan Kamaruzaman said the organisation had exposure to the US dollar. For that reason, it has started hedging its exposure to it.

“We have used conventional instruments to hedge and have also tried Islamic instruments such as forward and cross currency swap,” he added.

Wan Kamaruzaman said Islamic financial institutions would need to grow in size to be able to carry a bigger risk limit for hedging products. — Bernama

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