EPF Dividends vs Unit Trust Returns

I was asked about the returns of Unit Trust investment, particularly with reference to my statement in my first article that "I have invested in unit trust regularly for the last 7 years, and the returns are much better than EPF dividends."

As for returns of mutual trust investment using our EPF saving, the annual EPF dividend is a better parameter for comparison.

Below are the graph and table of EPF dividends from 2001 to 2006. In 2007, the dividend was the highest at 5.8%.

You could notice that EPF has been paying an annual dividend of 4.25 to 5.8% since 2001. Subtracting the inflation factor, the Real Dividend Rate ranges from 1.35 to 3.6%.

What about Returns from Unit Trust Investment?

I started investing in unit trust on 10 June 2000. Every three months or so after that, thanks to Ms Demy, my Unit Trust Consultant, she would come to my office and process the EPF withdrawals and Trust Fund investments for me.

I have six funds under my portfolio by now, one of which is a bond fund. The oldest fund in my portfolio has grown more than double, 2.17 times to be exact. A check with the latest Master Prospectus of the Trust Funds, this fund has recorded an Average Annual Returns Since Launched of 29.83%, which is far much better than EPF.

Last year, EPF made a ruling that all EPF withdrawals have to be invested in local funds. Therefore, we should look at the the returns of local content funds. The four local content funds listed in the Master Prospectus show Average Annual Returns of 16.26%, 14.40%, 33.75% and 19.82%. These Average Annual Returns were based upon the returns since the funds were launched.

The various funds that I used for comparison above are equity or balanced funds which invest substantially in share markets.

Mutual fund companies in Malaysia have launched several new funds which were approved for EPF investments. There are ample funds which are open for new investors to choose from.

If you would like to have more information of EPF-approved mutual funds, kindly email shpoh88@gmail.com.

[This posting was first published on May 5, 2008}