EPF performs better than Unit Trusts
The decrease in the Unit Trust valuations as at June 30, 2012 from
that as at June 30, 2011, in percentage terms, has been much higher than
the decrease recorded by the EPF in its equity portfolio. Research has
revealed that the net asset value of Unit Trust investments has plunged
by over 25 percent during the year ending June 30, 2012, with the value
of all investments of the Unit Trusts decreasing to Rs. 20.1 b by end
June 2012, from Rs.26.9 b at end June 2011. Accordingly, the value of
investments of the Unit Trusts has decreased by a sum of Rs 6.8 b.
As per the data available, such unrealised loss, just like the
unrealised loss in the case of EPF's share portfolio too, has been
mainly due to the loss in value of stock market investments by private
Unit Trusts. Analysts therefore have concluded that this situation
clearly suggests that the criticisms that have been levelled against the
EPF by certain politicians and trade unions about the unrealised loss in
value of the EPF's portfolio of investments in the Colombo Stock
Exchange, have been unfounded and politically motivated.
Since of late, a massive campaign had been launched by a group
co-ordinated by the anti-China UNP MP, Harsha de Silva to force the
Government to place the EPF funds under the control and management of
the private sector Unit Trusts. As a part of that campaign, recently,
Murtaza Jafferjee of JB Stockbrokers joined this group and made a
serious pitch for the hand over of the EPF portfolio to the private
sector Unit Trusts to manage, on the basis that the Unit Trusts would be
able to generate at least one percent more than the returns gained by
the EPF management. However, the latest data that indicates that the
performance of the private sector Unit Trusts have been much worse than
the performance of the EPF management, is bound to embarrass this group,
and expose their regular and vociferous claims as being baseless.
As set out in this column, in the recent past, the 'break-up-the-EPF'
mafia have stepped up their campaign that the EPF fund must be broken up
into parts and handed over to the private sector Unit Trusts for
management. After Murtaza Jafferjee's comments last week, the private
sector Unit Trusts received a boost and were shown off as the gurus in
investment and were offered as the alternative fund managers who could
take over EPF's portfolio management function. However, for their bad
luck, barely a week has gone by, and the grand showmanship of this mafia
has come to zero, with the pathetic performances of the Unit Trust being
publicly exposed.
This revelation would mean that the mafia will now have to develop a
new story as their justification for the handing over of EPF funds to
the private sector unit trusts. This set back in the Unit Trust results
is also likely to discredit the bold recommendation made by the US-based
Consultants, McKinsy and Co., who too had advocated the shift of EPF
funds to the private sector unit trusts.
While it is likely that the current revelations which are causing a
huge embarrassment to these groups and their media backers, would
silence them for a short period of time, it is certain that before long,
they will probably surface with another canard to drum up support for
their 'break-up-the-EPF' mission.
In that backdrop, the EPF would do well to make use of this
opportunity to raise this matter in the relevant circles, including the
trade unions that had criticised the EPF investments, and convey the
true picture relating to investments in the country's stock market.
To do so, they must create greater awareness regarding the concept of
investing in shares and securities on a portfolio basis, so that the
majority of the people in the country would be able to understand and
appreciate the nature of portfolio investments.
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