KUALA LUMPUR: The Employees Provident Fund (EPF) reported a 13.47% growth in investment income to RM10.40 billion for the second quarter ended June 30, 2014 (2Q14), from RM9.16 billion in the previous corresponding period.
“Both domestic and international equities generated investment returns of RM6.49 billion, which marked a rise of 16.06% or RM898.50 million, compared with the corresponding period in 2013,” said EPF in a statement today, adding that out of the total equity investment returns, 42% were contributed by international portfolios.
According to the statement, equity investments remained the main contributor to EPF’s 2Q14 performance.
Loans and bonds were the second largest contributors to EPF’s investment income, generating a 21.23% increase in returns to RM1.85 billion from RM1.53 billion recorded in the previous corresponding quarter.
Meanwhile, Malaysian Government Securities and Equivalents, generated an income of RM1.74 billion, registering an increase of 13.77% compared with 2Q13.
Chief Executive Officer Shahril Ridza Ridzuan says the retirement savings fund will continue to put greater emphasis on clinching sustainable long-term returns as opposed to just focusing on short-term returns.
“We are pleased with the 2QFY14 results as we are able to maintain the previous quarter’s momentum on the back of a stable and encouraging Malaysian economy.
“The improved global investment climate, particularly in the emerging markets, had also facilitated us in carrying out our investment and profit taking activities,” he said in the statement.
During the same period, real estate and infrastructure posted an income of RM184.12 million, compared with RM296.28 million in 2Q13, while money market instruments contributed RM107.32 million in investment income in the 2Q14.
Investments in real estates and infrastructures represented RM14.92 billion or 2.44% of EPF's total investment assets as at June 30.
“The inflation rate has been on a rising trend since 2009 and is expected to further increase temporarily in 2015.
“With this in mind, we continue to explore and diversify into alternative investments namely real assets comprising both real estates and infrastructures,” says Shahril, adding that these asset classes are effective inflation hedging tool.
He adds that the EPF aims to provide at least 2% of real returns over a three-year rolling period to its members, in line with the fund’s objectives of preserving and adding value to members’ savings.
As at June 30, EPF’s investment assets registered a growth of RM58.49 billion to RM612.41 billion, from RM553.92 billion in 2Q13.