KUALA LUMPUR, 23 December 2020: The Employees Provident Fund (EPF) recorded a gross investment income of RM17.33 billion for the third quarter ended 30 September 2020 amid continued volatility in the capital markets in an operating environment overshadowed by the COVID-19 pandemic.

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. Net investment income (after impairment and cost write down for listed equities) came in at RM16.87 billion.

Chief EPF Officer Alizakri Alias said, “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”.

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.

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).

Outlook for rest of the year

As for the EPF’s performance in the remaining months 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. We expect interest rates to remain lower for longer as central banks continue to ease monetary policy to support their respective economies”.

“For Malaysia, as a trade-dependent country, the continued uncertainties surrounding the global economic recovery will have an impact on external demand which may then affect the job landscape and curb domestic economic activities,” Alizakri added.

“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.”

Summary of Q3 Results

*Contributions from Malaysian Government Securities & Equivalent, Loans and Bonds

 

Issued by the EPF Media Desk

Corporate Affairs Department

23 December 2020