KUALA LUMPUR — November 21, 2016: The Employees Provident Fund’s (EPF) investment income surged 29.21 per cent to RM12.32 billion in the third quarter ended last September 30 from a year ago.
Investment assets increased 4.09 per cent to RM712.50 billion from the amount recorded as at December 31, 2015.
The agency’s Chief Executive Officer Datuk Shahril Ridza Ridzuan remarked that the improved year-on-year performance in Q3 was accentuated by a low base.
“Our overseas investments continued to enhance returns during the quarter, while non-cash impairments also recorded a significant reduction from last year,” he said in a statement today.
In Q3, non-cash impairments significantly improved to RM349.59 million, from the RM1.02 billion reported in the corresponding quarter last year.
Equities, which made up 41.24 per cent of total investment assets, contributed RM7.02 billion, representing 56.96 per cent of total investment
income for the quarter. This was 49.02 per cent higher when contrasted to the amount recorded in the corresponding quarter of 2015.
The higher income in the third quarter was attributed to an improvement in equity prices, mainly in the North Asian and developed markets.
As of September, 49.76 per cent of EPF’s investment assets were in fixed income instruments.
In the reviewed quarter, fixed income investment generated RM4.52 billion, equivalent to 36.65 per cent of the quarterly investment income.
Income from Malaysian Government Securities and equivalent rose 7.21 per cent to RM1.95 billion while loans and bonds generated an investment income of RM2.56 billion, compared with RM2.54 billion in Q315.
Going forward, Shahril said EPF’s cost for overseas investments would increase as it will be at higher foreign exchange rates.
“The low interest rate environment will also continue to reduce the return from our fixed income investment, as maturing higher yielding bonds will be reinvested at the prevailing low interest rate.
“Given the decline in investment income in the first half of the year and the uncertainties expected to remain for the rest of the financial year, it would be a challenge for the EPF to sustain previous years’ returns,” said Shahril. — Bernama