Investment assets allocation of social security organization (PERKESO) / Jimmy Hendrick Kijon

Abstracting from its disability and life insurance aspects, Social Security can be understood as a financial intermediary that specializes in providing two distinct kinds of financial services. In Malaysia, SOCSO provide two social security schemes to protect the welfare of employees and their dependents. The two schemes are The Employment Injury Scheme and The Invalidity Pension Scheme. In order to make sure that the funds meet the cash flow needs and to provide competitive investment return for the SOCSO, the fund must be managed in a manner consistent with the investment policy set by the organization. Asset allocation is the process of determining how much you will invest in each specific asset class in your portfolio. Research has shown that the decision of how to allocate the asset is the most important factor affecting portfolio’s performance (see Robert G. Ibbotson and Paul D. Kaplan, “Does Asset Allocation Policy Explain 40, 90 or 100 Percent of Performance?, Financial Analyst Journal, January/ February 2000, pp. 26- 33). In general, the first decision we should make when we are determining our asset allocations is between stocks and bonds. The second decision we should make when we determining our assets allocations is an understanding our risk tolerance.