A word of caution on the good results of EPF

Like most things claimed by BN leaders, we cannot take it at face value. I am just using what was reported in The Star yesterday:

Rm6.75b added to EPF coffers
http://thestar.com.my/news/story.asp?file=/2011/9/14/nation/9496396&sec=nation

"The Employees Provident Fund (EPF) posted RM6.75bil in investment income in the second quarter of this year, a year-on-year growth of 24.42% or RM1.32bil compared with the same quarter last year."

I would presume the investment income mentioned included those derived from additional investments, using money from additional funds from contributors during the past year. To have a proper year-on-year comparison, the growth of 24.42% or Rm1.32bil compared with the same quarter last year should not have included income from new funds, if it was meant to show the efficiency of their fund management.

To use a simple example, let's say 2010's income during the second quarter was 100 from a fund of 1000 invested, or a return of 10%. If during the same quarter in 2011, income of 120 was derived from 1200 invested, then the rate was only 10%, and the growth rate was actually 0%! This is over-simplistic but shows how the increase in income was due to the increased investments.

The other item which could mislead was the statement, 'Profit-taking from some investments also added to our performance'. Profit-taking is not something which we should assume to be a recurring income because the stock market is highly volatile. So how much of the increased income was due to profit-taking? What if the market was such that no gains could be realized and EPF had to provide for net diminution in value of the investments?

"As at June 30 this year, the EPF's total investment fund stood at Rm462.54bil." Wouldn't it be more meaningful to include the total investment fund as at June 30 last year? It is so easy to include, why was the comparative figures left out?
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