Currency movements and milder stock gains moderated EPF’s 2025 returns, with economists highlighting the fund’s resilience and positive real returns for members.
PETALING JAYA: Currency movements and comparatively milder stock market gains are among the key factors that moderated EPF returns for 2025, according to an economist.
Malaysia University of Science and Technology economist Prof Dr Barjoyai Bardai explained that over 45% of EPF’s portfolio is invested abroad, largely in US dollar-denominated assets.
He said the ringgit’s appreciation against the US dollar reduced the value of those overseas holdings when converted into local currency, effectively trimming net investment income.
“Exchange rate translation losses have had a tangible impact on overall returns,” Barjoyai told theSun.
He said while the local bourse registered gains in 2025, the percentage increase in share prices was less robust than in the preceding year.
“The index improved, but the momentum was not as strong as before. That inevitably influenced the fund’s aggregate performance.”
Universiti Teknologi Mara Malacca finance lecturer Dr Idham Razak said the dividend rate, despite being slightly lower than the previous year’s, should be viewed as a sign of institutional stability rather than underperformance.
“Given the heightened external uncertainties, sustaining returns above inflation is in itself a positive sign. It means contributors’ real purchasing power is preserved,” he said..
He added that EPF’s diversified asset allocation – spanning domestic equities, fixed income instruments and a growing share of international investments – has continued to provide resilience.
From a portfolio management standpoint, Idham said marginal adjustments in dividend rates are normal for long-term pension funds whose core mandate prioritises capital preservation and sustainable returns over short-term performance maximisation.
“The slight moderation likely reflects prudent positioning amid currency fluctuations, geopolitical risks and uneven global equity performance rather than any deterioration in investment capability.”
Idham said with Malaysia’s inflation remaining relatively contained, real returns remain positive.
The Sun Malaysia
