KUALA LUMPUR: The Employees Provident Fund (EPF) is exploring the natural resources sector as its next investment area as it is more sustainable and able to provide long-term income, said chief executive officer Datuk Shahril Ridza Ridzuan.
He said the pension fund was one of the largest investors in oil palm-based companies, as well as, shareholders in several oil palm companies.
“We are looking at the potential prospect of taking more direct exposure and also having control of the companies,” he told a press conference after releasing the EPF Annual Report 2016 here yesterday.
Shahril said palm oil production is quite synchronised in terms of the price movement and production cost but noted that there must be a stable cash flow.
Last year, the EPF had disposed of its stake in Felda Global Ventures Holdings Bhd, a Malaysian-based global agricultural and agri-commodities company, after holding a 7.95 per cent stake in the company when it was listed on Bursa Malaysia in 2012.
Shahril said the fund had to follow a strict investment policy whereby the companies in which it was interested to invest in should be fundamentally healthy.
He also said that the EPF’s asset diversification across multiple asset classes, geographies and currencies had served the fund well under adverse circumstances.
“This gives us the flexibility to rebalance our portfolio and take profit from different assets or markets under changing market conditions,” he added.
As at Dec 31, 2016, the EPF’s foreign investments, which constituted 29 per cent of total assets under management, contributed 39 per cent of the total RM46.56 billion gross investment income.
On foreign investments, he said that the fund was early in penetrating the United Kingdom (UK) market by acquiring assets in 2008, 2009 and 2010 during the financial crisis and post-crisis.
“We have actually been divesting assets in the UK for the last couple of years and we are planning to capture some gains coming in from Europe … we are quite comfortable with this,” he said.
The fund is expected to sell some of its buildings in Britain, which could fetch around RM550 million in profit. —Bernama