EPF posts RM17.33bil investment income in Q3, assets stand at RM942bil

KUALA LUMPUR: The Employees Provident Fund (EPF) recorded a gross investment income of RM17.33 billion for the third quarter (Q3) ended September 30, 2020 amid continued volatility in the capital markets in an operating environment overshadowed by Covid-19.

EPF chief executive officer Tunku Alizakri Alias said this year had seen great volatility in the financial markets which saw very rapid movements from one extreme to the other.

“Our financial positions over the first three quarters have been affected by the volatility in market sentiments exacerbated by the uncertainties of the Covid-19 pandemic and continued fragile consumer sentiments,” said Alizakri.

According to EPF, equities contributed RM7.29 billion or 42 per cent to total gross investment income in Q3, while fixed income instruments registered RM8.18 billion.

“Real estate and infrastructure, as well as money market instruments, contributed RM1.63 billion and RM0.23 billion respectively.

“Net investment income (after impairment and cost write down for listed equities) came in at RM16.87 billion,” it said.

The global equity indices that the EPF tracks closely have rebounded from their lowest in March, but many have yet to recover to pre-pandemic levels seen at the end of 2019.

Investments in fixed income instruments, meanwhile, contributed 47 per cent to the gross investment income during the quarter.

The widespread drop in yields has provided opportunity for the EPF to increase trading activities and capitalise gain.

But the fund is cautious of the lower reinvestment yield and remains careful in ensuring that the long-term health of the portfolio is not jeopardised.

As at end-September, the EPF’s investment assets stood at RM941.77 billion, of which 68 per cent was allocated to the domestic market while 32 per cent was allocated to the overseas markets, which contributed 45 per cent to gross investment income for Q3..

By asset class, fixed Income instruments made up 49 per cent of investments while equities comprised 39 per cent.

Money market instruments and real estate and infrastructure made up seven per cent and five per cent respectively of investments.

EPF expects interest rates to remain lower for longer as central banks continue to ease monetary policy to support their respective economies.

Alizakri said for Malaysia, as a trade-dependent country, the continued uncertainties surrounding the global economic recovery would have an impact on external demand which may then affect the job landscape and curb domestic economic activities.

“Throughout this very challenging year, we remain steadfast in our commitment to helping our members achieve a better future and also safeguard their long term retirement savings by preserving capital and safely riding through this volatile period.

“This will be achieved by always ensuring profits generated from our investments are done in a healthy and sustainable manner with prudent write down and impairment measures being proactively practiced at all times,” he added.

Source: TheEdgeMarkets