by AZREEN HANI/ pic by TMR
THE Employees Provident Fund (EPF) recorded RM17.33 billion gross investment income for the third quarter ended Sept 30, amid continued volatility in the capital markets and Covid-19 pandemic.
EPF said in a statement that for the third quarter, Equities contributed RM7.29 billion or 42% to total gross investment income, while Fixed Income instruments registered RM8.18 billion.
Real Estate and Infrastructure, as well as Money Market instruments, contributed RM1.63 billion and RM0.23 billion, respectively.
Its net investment income came in at a total RM16.87 billion.
“This year has seen great volatility in the financial markets which saw very rapid movements from one extreme to the other. Our financial positions over the first three quarters have been affected by the volatility in market sentiments exacerbated by the uncertainties of the COVID-19 pandemic and continued fragile consumer sentiments,” EPF CEO Alizakri Alias said in the same statement today.
As at end-September 2020, the EPF’s investment assets stood at RM941.77 billion, of which 68% was allocated to the domestic market while 32% was allocated to the overseas markets, which contributed 45% to gross investment income for the third quarter.
By asset class, Fixed Income instruments made up 49% of investments while Equities comprised 39%. Money Market instruments and Real Estate and Infrastructure made up 7% and 5% respectively of investments.
The portfolio reflects the EPF’s strategy to optimise returns within tolerable risk limits as guided by the Strategic Asset Allocation (SAA).
Commenting on the fund’s prospects for the remainder of the year, Alizakri said: “While we remain guided by our SAA, much really depends on rapid and effective responses to the Covid-19 pandemic that must address the massive impact to the economy and ensuring the continuity of businesses, jobs and lives.”
“Even as economies around the world struggle to recover from lockdowns, infections are rising again, which will be a serious impediment to any global economic recovery to pre-pandemic levels,” he added.
“We expect interest rates to remain lower for longer as central banks continue to ease monetary policy to support their respective economies”.
According to Alizakri, Malaysia, as a trade-dependent country, will be affected with the continued uncertainties surrounding the global economic recovery which may then affect the job landscape and curb domestic economic activities.
“Throughout this very challenging year, we remain steadfast in our commitment to helping our members achieve a better future and also safeguard their long term retirement savings by preserving capital and safely riding through this volatile period. This will be achieved by always ensuring profits generated from our investments are done in a healthy and sustainable manner with prudent write down and impairment measures being proactively practiced at all times,” he said.
The global equity indices that the EPF tracks closely have rebounded from their lowest in March, but many have yet to recover to pre-pandemic levels seen at the end of 2019.
Investments in fixed income instruments, meanwhile, contributed 47% to the gross investment income during the quarter. The widespread drop in yields has provided opportunity for the EPF to increase trading activities and capitalise gain, but the fund is cautious of the lower reinvestment yield and remains careful in ensuring that the long-term health of the portfolio is not jeopardised.
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