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Idea of The Week: Most Consistent EPF-Approved Equity Funds [13 January 2017] January 13, 2017
Ideal of The Week: Idea of The Week: Most Consistent EPF-Approved Equity Funds [13 January 2017]
Author : iFAST Research Team


Idea of The Week: Most Consistent EPF-Approved Equity Funds [13 January 2016]

Last year, those who have followed the headlines closely would be aware that Employees’ Provident Fund (EPF) has lifted its 30% foreign fund exposure cap on investments by members effective 1-August-2016, allowing them to invest in unit-trust funds that are fully focused on foreign investments and at the same time recognized by EPF. As of end-2016, we have 73 EPF-approved equity funds available on our platform. For 2016 as a whole, 33 (45.2%) of the funds on our platform have recorded positive returns while 40 funds (54.8%) ended the year in red. In this Idea of the Week, we will have a look at some of the top consistent-performing EPF-approved equity funds.

EPF-Approved Foreign Equity Funds

To start-off our screening process, we made comparisons between the performance of the EPF-approved funds on our platform against a benchmark return of 7.0% for the period between 2012 to 2016 on a calendar year basis. Our screening result shows that only two of the foreign equity funds, Affin Hwang Select Asia (Ex Japan) Quantum Fund and CIMB-Principal Greater China Equity Fund have consistently performed better than the benchmark of 7.0% over the past 5 years. The two funds are currently on our recommended fund list as well.

Table 1: Performance of EPF-approved foreign equity funds.

Fund
2012(%)
2013(%)
2014(%)
2015(%))
2016(%)
5-Yr Annualised Return (%)
Affin Hwang Select Asia (Ex Japan) Quantum Fund
27.4
21.5
8.8
9.6
11.8
15.6
CIMB-Principal Greater China Equity Fund
14.9
13.1
14.9
18.3
11.0
14.4
CIMB-Principal Global Titans Fund
9.3
34.2
10.7
24.7
5.6
16.4
Affin Hwang Select Asia Pacific (Ex Japan) REITs and Infrastructure Fund
20.3
8.5
14.2

10.0

4.5
11.4
TA Asian Dividend Income Fund
16.7
9.9
8.0
9.7
5.3
9.9

Source: Various fund fact sheets, iFAST compilations, data as of end-December 2016.

EPF-Approved Malaysian Equity Funds

Table 1: Performance of EPF-approved domestic equity funds.

Fund
2012(%)
2013(%)
2014(%)
2015(%))
2016(%)
5-Yr Annualised Return (%)
Eastspring Investments Small-Cap Fund
11.1
64.0
16.6
25.9
0.4
21.8
Eastspring Investments MY Focus Fund
14.7
45.4
12.9
11.4
-1.8
15.5
Kenanga Growth Fund
14.0
26.5
9.3
20.9
-0.1
13.7

Source: Various fund fact sheets, iFAST compilations, data as of end-December 2016.

For those who have read our recently published article, it will come as no surprise to learn that the EPF-approved Malaysian equity funds had a challenging year in 2016. Nevertheless, we have filtered the top three performing funds in 2016 that have consistently outperformed the 7.0% benchmark between 2012-2015. Despite the subpar 2016 performance compared to the foreign equity funds above, these Malaysian equity funds still managed to outperform the benchmark significantly on a long-term annualized basis.

See also: 2016 Top and Bottom Equity Funds: Abundance of Opportunities in Turbulent Times

Conclusion

With the removal of the foreign fund exposure cap, members can now include the EPF-approved foreign funds under their long-term retirement portfolio. This is a plus for those who have been seeking ways to geographically diverse their retirement savings aside from investing through the Malaysian equity funds. Considering the ever-rising living expenses in Malaysia, investors should never neglect the management of their retirement savings, as the percentage difference in returns could have a huge impact in the long run. Investors who are seeking to increase their retirement savings and enjoy tax relief benefits at the same time, here are some of the options you might consider. As for investors who are particularly concerned about future medical expenses, we have the solution just right for you!


This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus, product highlight sheet (PHS), and if necessary, consulting with financial or other professional advisers. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Amongst others, investors should consider the fees and charges involved. The relevant prospectuses have been registered and lodged with the Securities Commission. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Where a unit split/distribution is declared, investors are advised that following the issue of additional units/distribution, the NAV per unit will be reduced from pre-unit split NAV/cum-distribution NAV to post-unit split NAV/ex-distribution NAV. Where a unit split is declared, investors should be highlighted of the fact that the value of their investment will remain unchanged after the distribution of the additional units. All applications for unit trusts must be made on the application form accompanying the prospectus. The prospectuses and PHS can be obtained from Fundsupermart.com. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.