EPF Grows Investment Income to RM10.63 Billion in Q1 2015
The Employees Provident Fund (EPF) today announces investment income of RM10.63 billion for the first quarter ended 31 March 2015, a year-on-year growth of 20.33 per cent compared with RM8.83 billion recorded in Q1 2014.
As at Q1 2015, EPF’s total investment assets had grown to RM663.75 billion arising from net contributions of RM5.90 billion and the reinvestment of investment income generated during the quarter.
EPF Chief Executive Officer Datuk Shahril Ridza Ridzuan said, “The positive result was mainly attributed to a better performance from our equity investments. This was supported by economic developments including the stabilisation of oil prices and positive progress from the Eurozone, leading to a number of global markets registering encouraging growth.
“It is also worth mentioning that EPF’s global investments this quarter had contributed 44 per cent to our total income. The strengthening of the US dollar against major currencies had enhanced returns from our global investments and further demonstrates the benefits of our diversification strategy in the light of weak domestic equity markets.”
As at 31 March 2015, EPF’s global investments made up 25 per cent of total investment assets. Under the current low interest rate environment, the EPF has further diversified its investments in Equities, Real Estate and Infrastructure to ensure the preservation of its members’ savings and to generate the desired real rate of return.
During the quarter under review, Equities which made up 43 per cent of the Fund’s total investment assets emerged as the top investment income contributor of RM6.36 billion, representing 59.87 per cent of total income. The income generated was 31.44 per cent higher compared with RM4.84 billion recorded in the same corresponding period in 2014. The increase was mainly due to the higher income recognised in EPF’s global portfolios, capitalising on a price rally in both emerging and developed markets during the quarter.
Year on year, Real Estate and Infrastructure investments’ has grown by 43 per cent to RM20.93 billion as at Q1 2015. The asset class recorded an income of RM251.54 million for Q1 2015. The asset class is expected to receive more dividend income in the coming quarters, and to recognise the gains from recent property disposals.
The bulk of the EPF’s investments remained in Fixed Income Instruments, which made up 50 per cent of the Fund’s total investment assets as at Q1 2015. Fixed income investments continued to provide a steady stream of income amid the low interest rate environment. The EPF is presently taking opportunities to capitalise on yield movements to rebalance and enhance the portfolios’ yields given the view that rates will continue to remain at historical lows for a while.
Malaysian Government Securities generated RM1.70 billion worth of income during the quarter under review, up 7.38 per cent or RM116.91 million, compared with RM1.58 billion in Q1 2014. Meanwhile, Loans and Bonds recorded an investment income of RM2.03 billion compared with RM2.00 billion in Q1 2014. Money Market Instruments contributed RM278.20 million in income.
In addition, the EPF has also invested more than 40 per cent of its funds in Shariah compliant assets, in anticipation of the launch of a fully shariah-compliant fund in the future. EPF’s commitment and role in the development of Islamic Finance had led the Fund to be named the Best Institutional Solutions Provider Award 2014 for the second consecutive year at the IFN Islamic Investor Awards 2014.
Commenting on the market outlook, Datuk Shahril said “Global growth remains moderate with uneven prospects across countries and regions, particularly the contrasting outlook for emerging and developed markets. It is also widely anticipated that there is a higher risk now of US interest rates normalising and this will spur demand for the US dollar. This move will impact global currency and capital market volatility.
“While we managed to achieve a good start for the year, we remain cautious for the quarters to come due to the uncertainty of both economic and investment environments on the global and domestic fronts. As a retirement fund, the EPF continues to focus on our long-term strategies to meet our targets for an inflation-adjusted return,” Datuk Shahril stated.
About the Employees Provident Fund (EPF)
The Employees Provident Fund (EPF) is Malaysia’s premier retirement savings fund, providing basic financial security for retirement. The Fund is committed to preserving and growing the savings of its members in accordance with best practices in investment and corporate governance. It will always be guided by prudence in its investment decisions.
As a customer-focused organisation, the EPF delivers efficient and reliable services for the convenience of its members and registered employers.
The EPF continues to play a catalytic role in the nation’s economic growth, consistent with its position as a leading savings institution in Malaysia.
Date: 21 May 2015
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