I am not sure what kind of signal EPF (or fondly called Big E by zewt) is sending to contributors like us. It seems Big E is quite generous because they have willingly provide a loan to the Govt to inject the proceeds into Valuecap Sdn Bhd to buy undervalued listed companies on portfolio basis based on superior fundamental investment research.
Source: http://www.kwsp.gov.my/index.php?lang=en
Source: http://www.kwsp.gov.my/index.php?lang=enIn my Value Investment??? blog entry, I mentioned based on whatever little public information I can find i.e. press releases from the Govt, Valuecap apparently only grew at the 4 years and 10 months CAGR of 4.7% per annum. Lo and behold, Malaysian Insider then reported sometime in the evening today quotes from our 2nd Finance Minister that....
He said this was based on the past performance of Valuecap which has grown its portfolio from RM5 billion initially to RM8 billion now.
Wow, I know it is just me but I felt like the Govt somehow connects to people like me who are obviously concerned about paltry returns like 4.7% per annum. To allay these concerns, he tried to justify Big E's decision by telling us how good Valuecap is.
"I believe that they (Valuecap) will do well and EPF will certainly get their returns.
"Valuecap has done well. It has a good infrastructure, good staff that know better about the market and have a knowledge on what is happening in the global market," he told reporters after giving a closing remark at the Khazanah Megatrends Forum 2008, here today.
Aren't we all assured? I mean on the surface, using my 4 years and 10 months CAGR simple formula calculation to derive the growth of the portfolio, it grew by 10.2% per annum!
Isn't that great? It certainly is no Temasek (22% per annum) but it appears to be slightly better off than KLCI (8% per annum). Surely our savings in EPF are being well taken care in an efficient and reliable manner right?
Well, it appears not quite the case. I mean, look Big E, you have the monies, why don't you do it yourself? Afterall, you are a professional investment entity and you gave the assurance that you will seek optimum returns from your approved investments as what you said in your website.
Let's take a look at the yield currently derived from AAA papers or simply MGS, the staple of Big E investments.
Source: http://www.bpam.com.my/
From the above, assuming Quasi-Govt returns, the best Big E expects to get in 20 years horizon is 6.19%. That is 20 years ok. If we take a look at 5 years yield to try to match as close as what Valuecap is currently doing with its RM8 billion portfolio, the best they can hope for is 4.73%.
So Big E, are you happy with just 4.73% for a 5 years horizon? (Wait, this 4.73% is so eerily familiar... I wonder...) Anyway, is that THE optimum return you think the members are happily enjoying when you forsake the chance to make 10.2% per annum if you set out on your own?
Afterall, isn't your approved investment also include equity???
Don't you also have good staff that knows the better about the market and what is happening in the global market?
Makes one wonder isn't it?
He said this was based on the past performance of Valuecap which has grown its portfolio from RM5 billion initially to RM8 billion now.
Wow, I know it is just me but I felt like the Govt somehow connects to people like me who are obviously concerned about paltry returns like 4.7% per annum. To allay these concerns, he tried to justify Big E's decision by telling us how good Valuecap is.
"I believe that they (Valuecap) will do well and EPF will certainly get their returns.
"Valuecap has done well. It has a good infrastructure, good staff that know better about the market and have a knowledge on what is happening in the global market," he told reporters after giving a closing remark at the Khazanah Megatrends Forum 2008, here today.
Aren't we all assured? I mean on the surface, using my 4 years and 10 months CAGR simple formula calculation to derive the growth of the portfolio, it grew by 10.2% per annum!
Isn't that great? It certainly is no Temasek (22% per annum) but it appears to be slightly better off than KLCI (8% per annum). Surely our savings in EPF are being well taken care in an efficient and reliable manner right?
Well, it appears not quite the case. I mean, look Big E, you have the monies, why don't you do it yourself? Afterall, you are a professional investment entity and you gave the assurance that you will seek optimum returns from your approved investments as what you said in your website.
Let's take a look at the yield currently derived from AAA papers or simply MGS, the staple of Big E investments.
Source: http://www.bpam.com.my/From the above, assuming Quasi-Govt returns, the best Big E expects to get in 20 years horizon is 6.19%. That is 20 years ok. If we take a look at 5 years yield to try to match as close as what Valuecap is currently doing with its RM8 billion portfolio, the best they can hope for is 4.73%.
So Big E, are you happy with just 4.73% for a 5 years horizon? (Wait, this 4.73% is so eerily familiar... I wonder...) Anyway, is that THE optimum return you think the members are happily enjoying when you forsake the chance to make 10.2% per annum if you set out on your own?
Afterall, isn't your approved investment also include equity???
Don't you also have good staff that knows the better about the market and what is happening in the global market?
Makes one wonder isn't it?
6 comments:
Hi. Another good analysis. It really doesn't look impressive at all. And, the MOF II actually brags about this. Most unit trusts probably did much better during the same period.
dear ctchoo,
it is indeed very worrying indeed since all of us are forced to contribute monies to Big E and Big E makes this kind of decisions at the whim and bound of the govt with their own agendas....
wow... never know about this. very interesting indeed. but then again, it's not surprising at all.
i am probably going to make a proposal tonight...
dear zewt,
sad isn't it? it is our money... unlike Singapore's Temasek which uses their reserves and surpluses... not CPF money to main-main or experiment with....
From my rough calculation, if EPF's equity value fall 30% , EPF can buy more stake to maintain it's equity expossure.
read
http://hasbullah.pit.my/2008/10/saham-mawi-jatuh-pinjam-5-bilion.html
dear hasbullah pit,
not only that, what is so special about Valuecap that EPF themselves can't do it on their own?
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