Thursday 28 Mar 2024
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KUALA LUMPUR (Jan 11): Total gross investment income for the Employees Provident Fund (EPF) for the nine months ended Sept 30, 2021 (9M21) rose 7.7% year-on-year (y-o-y) to RM48.02 billion from RM44.6 billion the year before.

In a statement on Tuesday (Jan 11), the EPF said total gross investment income for the third quarter ended Sept 30, 2021 (3Q21), however, amounted to RM13.97 billion, lower than RM17.33 billion for 3Q20.

EPF chief executive officer Datuk Seri Amir Hamzah Azizan said 3Q21 was volatile for equities in both the domestic and emerging markets, largely caused by concerns surrounding rising inflation and interest rates.

“On the other hand, continued recovery of equities in the developed economies amid the heightened volatility provided the EPF an opportunity to capitalise additional gains,” he added.

The EPF said equities continued to be its main income contributor, accounting for 54% of total gross investment income at RM7.5 billion.

It said as part of its internal policy and a prudent measure to ensure a healthy portfolio, RM110 million was written down for listed equities during the quarter, compared with RM130 million in the corresponding period of the previous year.

After taking into account the cost write-down, RM13.86 billion of net investment income was recorded for 3Q21, according to the fund.

The EPF said that cumulatively, RM350 million was written down for listed equities, down from RM6.46 billion in the same period in 2020, on the back of continued recovery in the global equity market, resulting in net investment income of RM47.67 billion for 9M21, compared with RM38.14 billion for 9M20.

It said investments in fixed income instruments contributed RM5 billion, or 36% of 3Q21 gross investment income, which was lower than the RM8.18 billion generated in 3Q20 due to lower trading gains.

This was in line with the higher market yield in 3Q21, compared to the same period of the previous year, it added.

The fund explained that real estate and infrastructure, as well as money market instruments, contributed RM1.18 billion and RM290 million respectively.

As at September 2021, the EPF's investment assets stood at RM988.55 billion, of which 36% were invested in overseas investments.

The fund’s diversification in different asset classes, markets and currencies continued to provide income stability and add value to its overall returns.

In 3Q21, the EPF’s overseas investments generated RM8.1 billion in income, representing 58% of total gross investment income recorded.

A total of RM1.4 billion out of the RM13.97 billion gross investment income was generated for Simpanan Shariah, and RM12.57 billion for Simpanan Konvensional. Simpanan Shariah derives its income solely from its portion of the Shariah portfolio, while income for Simpanan Konvensional is generated by a share of both the Shariah and conventional portfolios.

Outlook

On the outlook for the rest of the year, the EPF said the post-lockdown recovery would continue, although at a slower pace, despite continuing concerns over the monetary policy and inflation outlook.

It said risks to Malaysia’s economic growth outlook remain tilted to the downside on external and domestic factors amid lingering Covid-19 concerns.

Amir Hamzah said continued inflationary pressure and aggressive shifts from central banks led yields to increase amid increased expectations of monetary policy tightening.

“The environment of increasing bond yields has not just impacted bond markets, but created unease in equities as well.

“Despite the challenging and unprecedented times, the EPF is hopeful of seeing market sentiments improving in the near future.

“As a long-term fund, we remain committed and guided by our Strategic Asset Allocation that helps us to ride out volatility while taking advantage of declines in valuations of fundamentally strong assets,” he added.

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