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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » EPF performs better than Unit Trusts

EPF performs better than Unit Trusts

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1EPF performs better than Unit Trusts Empty EPF performs better than Unit Trusts Sun Nov 04, 2012 3:45 pm

sriranga

sriranga
Co-Admin
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.
http://www.sundayobserver.lk/2012/11/04/fin21.asp

http://sharemarket-srilanka.blogspot.co.uk/

2EPF performs better than Unit Trusts Empty Re: EPF performs better than Unit Trusts Sun Nov 04, 2012 8:15 pm

K.Haputantri

K.Haputantri
Co-Admin
We need not take Lakehouse group publications seriously. Their circulation has dropped drastically as their reporting is biased towards the Govt. Sunday Observer is misused to mislead the general public.

3EPF performs better than Unit Trusts Empty Re: EPF performs better than Unit Trusts Mon Nov 05, 2012 7:33 am

D.G.Dayaratne


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Public sector in this country is more efficient than private sector if they allow to work without political intransigence

EPF performance may be higher than this if EPF allow to take independent
decisions following stranded instructions and not on verbal instructions of higher authorities
Politicians role is to check weather Bureaucracy work according to instructions
But politically appointed managers always give instructions to violate instructions for personal benefits

Another thing is no one can say govt media is always wrong


4EPF performs better than Unit Trusts Empty Re: EPF performs better than Unit Trusts Mon Nov 05, 2012 8:25 am

Sidath

Sidath
Manager - Equity Analytics
Manager - Equity Analytics
@K.Haputantri wrote:We need not take Lakehouse group publications seriously. .

can't agree more. Would love to see table comparing actual figures of the EPF results vs the unit trust. Also making sure that they are not comparing equity returns vs fixed income. This is a common trick



Last edited by Sidath on Mon Nov 05, 2012 9:29 am; edited 1 time in total (Reason for editing : error)

5EPF performs better than Unit Trusts Empty Re: EPF performs better than Unit Trusts Mon Nov 05, 2012 1:52 pm

OnlyGuru


Stock Analytic
Stock Analytic

Well, you hit the nail on head.

@Sidath wrote:
@K.Haputantri wrote:We need not take Lakehouse group publications seriously. .

Also making sure that they are not comparing equity returns vs fixed income. This is a common trick

EPF investment in equity is less than 10% of total portfolio of EPF.



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