Wednesday, 1 March 2017

EPF: trading just to recognize returns?

Article in The Star: Can EPF maintain its good returns?

One snippet:

Analysts say that while the EPF knows it has unbooked profits to be made, it does, however, only recognise profits and payments to dividends once it sells its shareholdings.

In order for the EPF to be able to announce their yearly returns it needs to sell shares and buy them back, occurring expenses in the process?

What a strange policy, why do they not just mark to market all of their listed investments?

This does explain the rather weired behaviour (which I have observed numerous times) like in this announcement:

I am dumbfounded, what a waste of money and effort and that just for some silly accounting practice, one which I don't even agree with.

All I can say is: I wish I were EPFs broker.


  1. I can't imagine what Bursa's (already weak ) trading volumes would be like if the EPF weren't so active!

  2. I believe EPF does this to creative market activities or liquidity. And there is this "buy low, sell high" opportunities allowing EPF to more than cover the trading commission expenses. So, all is not lost. My take.

    1. I cant believe EPF would be able to make a profit on these trades. Twice the normal charges (brokerage etc), once for selling, once for buying, plus their own operational expenses, and that all in large quantities.

    2. Yes, I suspect they'd have to have a team of extremely talented traders to make $$ on such aggressive trading... Do they?

    3. I did not mean EPF make money via "contra"s. I do believe their model is not much difference from many listed companies on Bursa (e.g. Hapseng) that buy back their own shares, to support price or creative activities, whatever reason, then after such accumulation (way below the 10% limit mandate), they chose to sell it in the open market. This practice, i am sure, you would despise, as the more appropriate thing to do is to cancel them.

  3. Makes you wonder if someone makes money from the trade commission.