Using EPF to invest into Unit Trust - Part 2 (EPF versus EPF approved Unit Trust)

For Part 2 of the "Using EPF to invest into Unit Trust" series, I will be sharing the performance statistics of EPF approved Unit Trust Funds versus that of EPF returns over a period of 7 years (2012-2018). 

EPF Approved Unit Trust Statistics

There are in total 278 funds (not inclusive of 9 funds from Amanah Saham Nasional Berhad) approved by EPF (this is based on the the fund list provided by EPF website). All 278 funds are broken down into the following:

 Breakdown of EPF Approved Unit Trust Funds

EPF Dividend Statistic (2012-2018)

Since the Islamic portion of EPF has only two years worth of dividend history, I will be using the EPF Conventional Dividends as the yardstick to compare the performance for both Conventional and Islamic Unit Trust (UT) funds.

EPF Historical Dividend (2012-2018)

Comparison 1: Average (%) Return of all UT Categories versus EPF Dividend

Annual returns for all UT Categories (equity, mixed assets, bond and money market) are summed up and compared against EPf's annual dividend. The result as shown below:

Sum of all EPF Approved UT versus EPF Dividend (Year on Year comparison)

Summary: EPF approved UT funds as a whole performed better than EPF in 4 out of the 7 years. However, EPF has shown consistency over the 7 years by generating positive dividend as compared to UT where in 2018, the average return was negative. It is important to highlight that a negative return can drastically impact many years of compounded return and this will be highlighted in Comparison 4.

Comparison 2: Average (%) Return of Equity based UT versus EPF Dividend

Average (%) Return of UT(Equity Conventional) versus EPF Dividend

Average (%) Return of UT(Equity Islamic) versus EPF Dividend

Summary: Similar trend is observed here for conventional equity UT except that the annual gain or loss are amplified. Islamic Equity UTs on the other hand are struggling with negative return seen in 2018, 2016 and 2014. 

Comparison 3: Average (%) Return of Mixed Assets based UT versus EPF Dividend

Average (%) Return of UT(Mixed Assets Conventional) versus EPF Dividend

Average (%) Return of UT(Mixed Assets Islamic) versus EPF Dividend

Comparison 4: What happens to RM1000 when invested into EPF Approved UT versus investing into EPF?

The outcome of investing RM1000 over 7 years into the Equity based UT category produced the following results:

Cumulative return of RM1000 over 7 years for EPF approved Equity UTs versus EPF

As you can see, the cumulative returns for the first 6 years (2012-2017) indicate that Equity UTs are outperforming EPF return. However a single poor performing year in 2018, resulted in the accumulated return for EPF approved Equity UTs to drop below EPF accumulated return. This is also a similar scenario for the Mixed Asset UTs as shown below:

Cumulative return of RM1000 over 7 years for EPF approved Mixed Assets UTs versus EPF

I have also taken the effort to summarized the cumulative return for all the EPF approved categories in a single table below:

Cumulative Return for all EPF Approved UT Categories

Summary: The overall statistics indicate that only the Unit Trust Funds under the Equity Category are able to "match" the cumulative return generated via EPF dividend. I would also like to highlight an important point where this comparison does not take into consideration the loss of opportunity from the compounding returns you get for having a head start from the larger savings you already have with EPF. 

Conclusion

I hope this article on "EPF approved Unit Trust Funds versus EPF" has in some way helped you in terms of awareness before deciding to withdraw your savings from EPF to invest. I have also simulated several scenarios using the data that I have accumulated. If you wish to obtain those data, feel free to email me at shanesee03@gmail.com.

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Related Links
Using EPF to Invest into Unit Trust Funds - Part 1 (The Pros of Investing into EPF Approved Unit Trust)