KUALA LUMPUR (Dec 23): The Employees Provident Fund (EPF) recorded a gross investment income of RM17.33 billion in the third quarter (3Q) of this year, a 14% increase over the RM15.12 billion reported in 2Q.
In a statement, EPF said equities contributed RM7.29 billion or 42% to total gross investment income, while fixed income instruments contributed RM8.18 billion or 47%.
Real estate and infrastructure, and money market instruments contributed RM1.63 billion and RM230 million respectively. Its net investment income, after accounting for impairment and cost write-down for listed equities, stood at RM16.87 billion.
"This year has 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 chief EPF officer Tunku Alizakri Alias.
The fund said global equity indices it tracks closely have rebounded from their lowest in March, although many have yet to recover to pre-pandemic levels seen at the end of 2019.
It said the widespread drop in yields provided opportunities for EPF to increase its trading activities and capitalise gain, but it remains cautious of the lower reinvestment yield and in ensuring the long-term health of its portfolio is not jeopardised.
As at end-September, EPF said its investment assets stood at RM941.77 billion, of which 68% was allocated to the domestic market while 32% was allocated to the overseas markets, which contributed 45% to gross investment income for 3Q.
In terms of asset class, 49% of its portfolio was accounted for by fixed income instruments, while equities comprised 39%, followed by money market instruments (7%), and real estate and infrastructure (5%).
"While we remain guided by our SAA (strategic asset allocation), much really depends on rapid and effective responses to the Covid-19 pandemic that must address the massive impact to the economy and in ensuring the continuity of businesses, jobs and lives," said Alizakri.
He added that the struggle of economies around the world to recover from lockdowns and the rising number of infections will be a "serious impediment" to any global economic recovery to pre-pandemic levels.
Interest rates are expected to remain lower for longer, he said, as central banks continue to ease monetary policy to support their economies.
"For Malaysia, as a trade-dependent country, the continued uncertainties surrounding the global economic recovery will have an impact on external demand which may then affect the job landscape and curb domestic economic activities," Alizakri said.
He said EPF remains steadfast in its commitment to helping its members achieve a better future and also safeguard their long-term retirement savings by preserving capital and riding through this volatile period.
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