by TMR / pic by TMR FILE

THE Employees Provident Fund (EPF) recorded RM48.02 bil total gross investment income for the nine months ended 30 September 2021 (9M 2021), an increase of 7.7% or RM3.42 bil, compared to the RM44.60 bil recorded for the same period in 2020.

Total gross investment income for the third quarter ended 30 September 2021 (Q3 2021) amounted to RM13.97 bil, lower than the RM17.33 billion recorded in the corresponding quarter in 2020, EPF said in a statement today.

“The third quarter of 2021 has been volatile for equities in both the domestic and emerging markets, largely caused by the concerns surrounding rising inflation and interest rates. On the other hand, the continued recovery of equities in the developed economies amidst the heightened volatility has provided EPF the opportunity to capitalise additional gains,” said EPF CEO Datuk Seri Amir Hamzah Azizan.

Equities continued to be the main income contributor, accounting for 54% of total gross investment income at RM7.50 bil.

As part of its internal policy and a prudent measure to ensure a healthy portfolio, RM0.11 bil was written down for listed equities during the quarter, compared to RM0.13 bil in the corresponding period last year.

After taking into account the cost write down, RM13.86 bil of net investment income was recorded for Q3 2021.

Cumulatively, RM0.35 bil was written down for listed equities, down from the RM6.46 bil for the same period in 2020 on the back of continued recovery in the global equity market, resulting in net investment income of RM47.67 bil for 9M 2021, compared to RM38.14 bil for 9M 2020.

Investments in fixed income instruments contributed RM5.00 bil, or 36% to Q3 2021 gross investment income, which was lower than the RM8.18 bil income generated in Q3

2020, due to lower trading gains. This is in line with the higher market yield in Q3 2021, compared to the same period last year.

“Continued inflationary pressure and aggressive shifts from central banks had led yields to increase during the quarter amid increased expectations for monetary policy tightening. The environment of increasing bond yields has not just impacted bond markets, but created unease in equities as well,” Amir added.

Real estate and infrastructure, as well as money market instruments, contributed RM1.18 billion and RM0.29 billion respectively.

As at September 2021, the EPF investment assets stood at RM988.55 billion, of which 36% was invested in overseas investments.

The EPF’s diversification in different asset classes, markets and currencies continue to provide income stability and add value to EPF’s overall returns.

In Q3 2021, the EPF’s overseas investments generated RM8.10 billion in income, representing 58% of the total gross investment income recorded.

A total of RM1.40 billion out of the RM13.97 billion gross investment income was generated for Simpanan Shariah, and RM12.57 billion for Simpanan Konvensional. Simpanan Shariah derives its income solely from its portion of the Shariah portfolio while income for Simpanan Konvensional is generated by a share of both the Shariah and conventional portfolios.

“The emergence of new infectious or vaccine-resistant variants of the COVID-19 virus is one of the key downside risks to economic growth and market recovery. Concerns over inflation and the tightening of monetary policy will continue to cause uncertainty and volatility in both the equity and bond markets,” said Amir.