KUALA LUMPUR: The Employees Provident Fund (EPF) recorded sequential improvement in its gross investment income as market conditions continued to stabilise for both its equity and fixed income investments.
For the third quarter of 2022, the retirement fund said total gross investment income came to RM12.32bil, which was 11% higher over the immediate preceding quarter's gross investment income of RM11.14bil, although it remained 12% lower compared with RM13.97bil in the same quarter in 2021.
Taking into account all three quarters of 2022, the EPF has recorded a total gross investment income of RM39.31bil, which is 18% lower compared with RM48.02bil in the same period in 2021.
"There are ongoing concerns that high interest rates will lead to a global recession, exacerbated by continuing geopolitical risks and interest rate hikes by the US Federal Reserve.
"However, notwithstanding these challenges, the EPF’s disciplined investment approach, guided by its robust Strategic Asset Allocation and active portfolio management, helped to cushion the impact and allowed the EPF to deliver a steady performance driven by the strong rebound in the domestic market," said EPF CEO Datuk Seri Amir Hamzah Azizan in a statement.
Amir Hamzah said that it is an opportune time for institutions investors like the EPF to reconfigure its business strategy to position for short-term endurance along with long-term resilience and growth.
"From an investment standpoint, the EPF remains resilient and focused on what we can control, namely asset allocation, costs, and an overarching strategy that emphasises long term sustainability of our investments and returns, in line with our Strategic Asset Allocation.
“Though the uncertainty revolving around international markets continues to be a strong concern, we are taking a ‘cautiously optimistic’ stance as we are not ignoring indicators that may suggest improvement in the macroeconomic outlook such as the possible peak in global inflation and the Fed’s hints that interest rate increases will begin to slow in the coming months," he added.
During the quarter under review, equities accounted for 45% or RM5.49bil of the total gross investment, representing a quarter-on-quarter (q-o-q) growth of 13%.
The EPF said private equity, which is becoming more important for the fund's diversification efforts amid the volatility in listed equity markets, managed to deliver 20% of the total equities income during the quarter.
Fixed income instruments comprising Malaysian Government Securities and equivalents as well as loans and bonds, contributed 39% or RM4.77bil to the gross investment income during the quarter.
Real Estate and Infrastructure registered an income of RM1.67bil, while income from Money Market Instruments generated RM390mil, in line with the return expectations set for these asset classes.
Of the total investment assets, 36% were made up by overseas investments, which generated RM5.28bil or 42% of the total gross investment income.
As at Sept 30, 2022, the EPF has 15.61 million registered members, following an addition of 510,354 members in the January to September period.
Of that total, 8.26 million were active members, representing half of Malaysia's 16.44 million labour force as at Sept 30, 2022.
