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Friday, October 7, 2011

Sri Lanka's biggest fund increases equity investments

Oct 06, 2011 (LBO) - The Employees’ Provident Fund (EPF), Sri Lanka's biggest fund with 976 billion rupees in assets and managed by the central bank, has increased investments in the stock market.

A central bank statement said the EPF's total assets, which had grown an annual 14.6 percent, are expected to reach a value of one trillion rupees by the end of 2011.

"A major share of the Fund (92 percent) has been invested in government securities, while the Fund has invested seven percent of its resources in equities and one percent in debt instruments of corporates."

The EPF's investments in stocks had previously been limited to five percent of the fund.

But it has been investing heavily in the Colombo bourse, buying mainly into conglomerates and banks, since the end of the island's 30-year ethnic war in 2009 triggered a stock market boom.

EPF buying helped push up share prices on the Colombo bourse, which rose to record highs and became one of the world's top performing markets in the last two years.

However, the market has been falling in recent weeks amid fears of a bubble.

Buying by Sri Lanka's largest fund also enabled foreign investors, who entered the market during the war when prices were much lower, to sell-out as only a few institutional investors have the size to buy large quantities of shares.

The central bank said the EPF is managed by a team of professionals with accounting and financial analyst as well as postgraduate qualifications and also trained in investment management.

"The total income of the Fund has also recorded a steady growth, particularly over the last five years, enabling the EPF to pay a higher rate of return to its members," it said.

The rates of return given by the EPF to members in the last two years had been above alternative investment opportunities available in the country such as similar pension funds, the one-year fixed deposit rate of a major savings bank and the commercial banks' Average Weighted Deposits Rate.

In 2010, over 210,000 new employees registered with the EPF.

source - www.lbo.lk