KUALA LUMPUR – The Employees Provident Fund (EPF) recorded a total investment income of RM47.86 billion for the nine months ended September 30, an increase of 33% from RM36.04 billion posted in the same period in 2022.
The amount was after netting off listed equity write-downs recorded for the period, the retirement fund said in a statement today.
“Out of the RM47.86 billion total investment income, RM4.62 billion was generated from mark-to-market (MTM) gains of securities that have not been realised. The MTM gains were mainly due to the fluctuation of foreign exchange rates,” it said.
For the third quarter (3Q 2023) ended September 30, the total investment income was RM14.67 billion after netting off write-downs. The amount was an increase of RM2.38 billion from RM12.29 billion recorded in the corresponding period in 2022.
EPF chief executive Datuk Seri Amir Hamzah Azizan said that in 3Q 2023, global equities posted a negative return, shifting significantly from the strong gains experienced in the first half of the year.
“The Gaza-Israel war and the ongoing Russia-Ukraine conflict will undoubtedly contribute to an atmosphere of uncertainty and market volatility.
“We anticipate geopolitical risks to continue to amplify the already turbulent economic situation. Market sentiments also experienced various changes, influenced by multiple factors, such as the concerns about China’s economic health, rising energy prices and increasing government bond yields, all against the backdrop of the potential for an extended period of high interest rates,” he said.
Furthermore, he added that the global fixed income markets experienced negative total returns in 3Q 2023, due primarily to the sharp increase in sovereign yields.
Equity investments remained a significant contributor, accounting for 63% of the total investment income in 3Q 2023, with RM9.17 billion generated after netting off write-downs, the fund said.
The increase in income compared to the RM5.89 billion recorded in 3Q 2022 can be attributed to the fund managers’ proactive approach to realising capital gains at the beginning of the quarter, which saw some equity indices recording their best year-to-date performance, particularly for developed markets.
Fixed income instruments comprising Malaysian government securities and equivalents, as well as loans and bonds, contributed 32%, or RM4.76 billion, to the EPF’s total investment income for 3Q 2023.
“Real estate and infrastructure registered an income of RM0.29 billion, while income from money market instruments generated RM0.45 billion, contributing 2.0% and 3.0% to the total investment income for 3Q 2023 respectively,” it said.
Meanwhile, the EPF’s investment assets continued to record strong growth backed by the higher income generated from its investments and healthy net contributions received as of September 2023 amounting to RM73.58 billion, compared to RM63.61 billion recorded in 2022.
“As of September 2023, the EPF’s investment assets stood at RM1.092 trillion, of which 37.7% was invested in overseas investments. The increase in overseas exposure since December 2022 was primarily due to the favourable movements in the foreign exchange translations as well as the capital appreciation that pushed the valuations higher.
“In 3Q 2023, overseas investments generated RM6.55 billion, or 45%, of the total investment income recorded,” it said.
The retirement fund also said a total of RM42.71 billion out of the RM47.86 billion investment income was generated for conventional savings, and RM5.15 billion for shariah savings.
Meanwhile, Amir Hamzah said the launch of Malaysia’s New Industrial Master Plan 2030 heralds a significant milestone in the country’s economic trajectory as it provides a strategic direction to develop the nation’s industrial sector to become globally competitive with high economic complexity.
“As we navigate this economic landscape, our focus remains on prudent risk management and strict adherence to our long-term “strategic asset allocation” model, which has consistently proven its efficacy and has been instrumental in fortifying our resilience amid market uncertainties,” he said.
The EPF continues to record growth of new member registrations at 365,519, adding to the total number of its members as at September 30 of 15.99 million. A total of 8.53 million are active members, representing 50.4% of Malaysia’s 16.93 million labour force, while the active to inactive member ratio remained at 53:47 as of September. – November 17, 2023