EPF 2024 Dividend Rate To Range From 6.0 Pct-6.2 Pct - Analyst

By Karina Imran

KUALA LUMPUR, Feb 26 (Bernama) -- The Employees Provident Fund (EPF) is projected to announce a dividend rate of between 6.0 per cent and 6.2 per cent for 2024, supported by robust global and domestic economic conditions, said an analyst. 

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It was reported that EPF is set to announce its 2024 dividends this Saturday (March 1).

The head of investment research at UOB Kay Hian Wealth Advisors Sdn Bhd, Mohd Sedek Jantan, highlighted that a resilient global economy, strong equity market, favourable fixed-income yields, and a recovery in private equity activity are the key drivers behind the anticipated strong performance. 

“EPF’s diversified investment strategy, spanning equities, fixed income, private equity, and foreign assets, positions it well to deliver a stable and competitive dividend payout for 2024,” he told Bernama. 

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Mohd Sedek also noted that the Malaysian economy, which expanded by 5.1 per cent in 2024, played a crucial role in boosting investment returns. 

Additionally, the improved performance of the FTSE Bursa Malaysia KLCI (FBM KLCI), along with stable interest rates at 3.0 per cent and low inflation at 1.8 per cent, created an ideal environment for EPF’s portfolio growth.

Global economic conditions support EPF’s performance 

Mohd Sedek emphasised that global economic conditions, including interest rates, inflation, and economic growth, play a crucial role in determining the EPF dividend payout in Malaysia. 

According to the World Bank, global economic growth stabilised at 2.7 per cent in 2024, providing a strong foundation for investment returns. 

Additionally, a December 2024 report from the United Nations projected global trade to reach a record US$33 trillion (US$1 = RM4.42), marking a US$1 trillion increase from 2023. 

“This expansion, particularly in Asia, bolstered corporate earnings and equity market performance, further enhancing EPF’s investment returns,” he said.  

He said the US Federal Reserve’s (Fed) monetary policy stance also significantly impacted EPF’s performance. 

“Higher US interest rates kept global bond yields attractive. As a result, EPF was able to generate strong returns from its US dollar-denominated fixed-income investments, which provided a stable income base alongside gains from equities and private equity,” he said. 

EPF’s long-term strategy to sustain performance 

Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid emphasised the importance of EPF’s prudent governance and investment practices. 

He elaborated that EPF follows internal guidelines for strategic asset allocation (SAA) and tactical asset allocation (TAA)  to manage risks and optimise expected returns from its investments. 

“From the governance point of view, EPF has an internal investment committee that is comprised of highly experienced and competent employees who rigorously assess investment proposals and monitor existing investments. 

“Some funds are also being farmed out to the external fund managers, which allows the EPF to optimise their investment return and benchmark their internal portfolio performance,” he said. 

He added that the investment panel, comprising senior officials and experts from the government and private sectors, provide additional insight and guidance on EPF investment. 

Outlook for 2025 dividends

Mohd Afzanizam cautioned that EPF may face a more challenging landscape in 2025 due to global political and economic uncertainties.

He noted that the new US administration under President Donald Trump and his unconventional policies are likely to impact the global economy.

The situation is further complicated by tensions in Europe, particularly regarding Russia, the ongoing Middle East crisis, and China’s growing influence in global politics, suggesting a period of heightened risk and uncertainty in the investment landscape. 

“Typically, the financial markets dislike uncertainties, and protracted uncertainties would put a high-risk premium on the investment space. 

“The way we see it, EPF’s risk appetite would be affected by the ongoing event, and they might want to venture into less risky investments,” he said. 

Mohd Afzanizam pointed out that past dividend rates do not necessarily indicate future returns.

“EPF must consider the degree of risk premium and take a pragmatic approach to investments. Whatever the case, it’s always to benchmark the investment into something more universal, which is the inflation rate,” he said. 

He estimates the long-term inflation rate for Malaysia stands at 2.5 per cent per annum. 

“Hence, anything above 2.5 per cent indicates that the EPF members are better off as they can beat the inflation risk,” he added.

-- BERNAMA