PETALING JAYA: The Employees Provident Fund (EPF) reported a stronger total investment income of RM14.61bil in the third quarter ended Sept 30, but cautioned that it would be a challenge to sustain a similar momentum in the last three months of the year.
In a statement, the retirement fund announced that its total investment income has risen by 12.82% year-on-year, from RM12.95bil recorded during the same period in 2017.
The stronger growth was largely attributable to recovery in the Malaysian and Asean equities from the market downturn experienced in previous quarters.
In the third quarter, equities made up 40.67% of the EPF’s total investment assets and contributed RM8.89bil or 60.81% of the total investment income in the three-month period.
Of the EPF’s RM14.61bil total investment income, RM1.33bil was generated for the Simpanan Shariah, which derives its income solely from its portion of the syariah portfolio. Meanwhile, the remaining RM13.28bil came from the Simpanan Konvensional, generated by its share of both syariah and conventional portfolios.
According to EPF deputy chief executive officer for investment Datuk Mohamad Nasir Ab Latif, the market condition in the third quarter was volatile on the back of the Sino-US trade tensions.
However, the recovery in the Malaysian and Asean equities as well as the continued positive growth shown by the developed market equities have contributed positively to the fund’s income performance.
“Volatility is increasingly felt across the region, in which we saw a decline in regional equity markets in the fourth quarter of 2018. This will certainly pose a huge challenge to the EPF to sustain the same income momentum for the fourth quarter,” said Mohamad Nasir.
A total of 50.72% of EPF’s investment assets was in fixed income instruments, which recorded an income of RM4.73bil and was equivalent to 32.4% of the third quarter investment income.
Real estate and infrastructure recorded RM726.23mil in investment income, an increase from RM91.73mil a year ago. The marked increase was mainly because of higher dividend income.
Investments in money market instruments, which represent 3.92% of the total investment assets, contributed RM265.39mil to the investment income.
On outlook, Mohamad Nasir pointed out that EPF remained cautious of the uncertain external environment such as the continued US-China trade tensions, weaker commodity prices and the US interest rate hike as well as the challenging domestic equities market.
“Meanwhile, we are grateful for the support of the Finance Ministry and Bank Negara towards the EPF’s long-term global diversification efforts, which will greatly assist the EPF towards delivering its strategic targets of at least 2.5% nominal dividend and 2% real dividend on a rolling three-year basis,” he said.