KUALA LUMPUR: The Employees Provident Fund (EPF) recorded an investment income of RM15.16bil in the first quarter ended March 31, 2023, which was 3% more than RM14.77bil in the same quarter in 2022, as the fund's overseas investments continued to outperform.
During the quarter, the EPF's overall investment assets grew to RM1.04 trillion, of which overseas investments accounted for 37% of the total assets.
According to the retirement fund, overseas investments, which were mainly in equities, generated RM7.04bil in income, representing 46% of the total investment income recorded.
The fund's domestic investments accounted for 63% of the total assets that are mainly invested in held-to-maturity fixed income instruments, continued to provide long-term income stability through interests and profits.
"The EPF remains dedicated to supporting and contributing to the growth of home economy, by continuing to allocate more than 70% of its new investment annual allocation to the domestic market," it said in a statement.
The EPF said income from equities during the quarter increased to RM8.96bil, after netting off write downs, compared to R8.75bil recorded in 1Q22.
Equities remained the top income income contributor at 59% of total investment income.
It said write downs in the quarter were minimal at RM440,000 compared to RM1.09bil in the same quarter in 2022 due to the active portfolio management by the EPF fund managers.
Meanwhile, fixed income instruments comprising Malaysian Government Securities and Equivalent (MGS) as well as loans and bonds, contributed 32% or RM4.79bil to the investment income in 1Q23.
The EPF said both MGS and Government Investment Issues (GII) rallied during the quarter as overall benchmark yields declined with easing inflationary expectations in the US, providing opportunity for the EPF to capitalise on trading gains.
Real estate and infrastructure registered an increase in income to RM920mil in 1Q23.
Similarly, income from money market instruments rose to RM490mil, from RM280mil in 1Q22, in line with the return expectations set for these asset classes.
Moving forward, EPF CEO Datuk Seri Amir Hamzah said it is essential for the retirement fund to consider the broader market dynamics in order to comprehensively improve its prospects of providing a consistent dividend to its members.
The remaining quarter will see the EPF focusing on industries and sectors that are expected to recover after three years of the pandemic, which would result in higher labour demand, he said.
On the global outlook, advanced economies are projected to record slower growth compared to emerging and developing markets due to factors such as elevated global inflation and continuing geopolitical tensions.
Amir said although Malaysia’s economy is projected by Bank Negara to grow at a slower rate of 4% to 5%, lower than the 8.7% registered in 2022, the EPF is not tempering its expectations as it believes there are performing sectors that the fund can capitalise on.
"As Malaysia continues to increase its economic recovery efforts, we are seeing a steady uptick in Malaysia’s labour force participation rate that will create a solid foundation for sustaining consumer spending and economic development.
"The EPF’s membership data, which shows a continuing increase in the number of members and employers registering with the EPF, supports the notion that labour demand in the country has indeed improved,” he said.
On membership, the EPF said there were 116,423 new member registrations, bringing the total number of members to 15.79 million.
Out of that amount, a total of 8.45 million were active members, which represent 50% of Malaysia’s 16.81 million labour force.
New employer registrations also showed strong growth of 24,281 during the period, bringing the total number of employers registered with the EPF to 595,730.
Total contributions received increased from RM21.55bil in 1Q22 to RM25.83bil in 1Q23, the highest quarterly contributions to date which surpassed the pre-pandemic figures.
"The EPF continues to enhance its capabilities to meet the evolving needs and expectations of members and employers, as well as building up on its portfolio performance.
"This commitment has been the driving force behind our sustained performance, as we remain guided by our long-term Strategic Asset Allocation (SAA) that has enabled us to achieve our mandate and strategic targets,” said Amir.