EPF’s 1Q18 investment income grows 9.2% to RM12.9b

EPF will continue to exercise caution amid the aggressive pace of rate hikes by the Fed, says CEO


The Employees Provident Fund’s (EPF) investment income grew 9.2% to RM12.88 billion in the first quarter ended March 31, 2018 (1Q18), against RM11.79 billion recorded in the previous year, driven by positive growth in the domestic and Asean markets.

EPF CEO Datuk Shahril Ridza Ridzuan (picture) said the federal statutory body managed to record a consistent performance in 1Q18, while the developed markets were experiencing a decline in the quarter following higher than anticipated inflation in the US.

“Coupled with diversification into various markets, geographies and sectors, we have been able to cushion the decline in developed market equities, and this has resulted in a consistent performance in our overall portfolio with domestic equities emerging as an out performer,” Shahril Ridza said in a statement last Friday.

EPF noted that equities contributed RM7.93 billion, or 61.58% of total investment income for the quarter. Equities made up 41.59% of EPF’s total investment assets.

A total of 50.53% of EPF’s investment assets were in fixed-income instruments, which continue to provide consistent and stable income.

EPF saw the fixed-income investments recorded a total of RM4.76 billion in 1Q18, equivalent to 36.99% of the quarterly investment income.

In addition, income from Malaysian Government Securities and equivalent in the quarter increased to RM2.24 billion.

Loans and bonds generated an investment income of RM2.52 billion, while investments in money market instruments contributed RM292.91 million to the investment income.

Meanwhile, real estate and infrastructure recorded negative investment income at RM107.38 million in the three months, primarily caused by the weakening of the US dollar against other major currencies, including the ringgit, which impacted valuations on the investment.

EPF said, however, the negative investment income recorded for the asset class is expected to be offset by inflow of investment income in the coming quarters.

The value of EPF investment assets increased RM4.25 billion (0.53%) from Dec 31, 2017, to RM814.38 billion.

Out of the total investment assets, RM321.05 billion (39.42%) were in Shariah-compliant investments, while the balance was invested in the conventional portfolio.

A total of RM1.22 billion out of the RM12.88 billion total gross investment income was generated for Simpanan Shariah, while RM11.65 billion for Simpanan Konvensional.

EPF’s overseas investments contributed 33.6% to the total investment income during the quarter under review.

Shahril Ridza said the performance of the global market in the current quarter and for the rest of the year remains uncertain and EPF will continue to exercise caution amid the aggressive pace of rate hikes by the US Federal Reserve (Fed).

“Increased global trade tensions and weaknesses in key emerging countries present real threats to all markets and we are cautious of the overall outlook for returns this year.

“On the domestic front, we maintain a long-term positive outlook as Malaysian fundamentals remain strong despite some short-term volatility after the recent elections,” he added.