Last updated : 6/13/20 11:30 PM     

EPF Q1 2020 RECORDS RM12.16 BILLION GROSS INVESTMENT INCOME

KUALA LUMPUR, 13 June 2020: The Employees Provident Fund (EPF) recorded a gross investment income of RM12.16 billion for the first quarter ended 31 March 2020, in what has been an exceptionally challenging period due to the COVID-19 pandemic.

Alizakri Alias, Chief EPF Officer, said, “The pandemic had a massive impact on an unprepared world, with lives being forever transformed and economies crashing to unprecedented levels. This happened on the back of an already weak global environment characterised by extremely low oil prices and market volatility from uncertain and unpredictable geopolitical issues ongoing since 2019.

“All asset classes were severely affected, particularly equities which suffered steep declines with the global markets going down as much as 32%, while our local FBM KLCI dropped by 15% as at 31 March 2020. Furthermore, as central banks across the world introduced various monetary policy measures to support households and businesses, consequent cuts in interest rates reduced the yield on fixed income investments. The EPF was not spared from the impact of COVID-19 and we recorded marked declines in the performance of our investment assets.”

Fixed income instruments contributed RM4.87 billion to gross income. Real estate and infrastructure, as well as money market instruments, contributed RM0.43 billion and RM0.54 billion respectively, while equities registered RM6.32 billion, or 52% of total gross income. After taking into consideration the write-down on listed equities, a prudent practice by the EPF in ensuring that its long-term investment portfolio remains healthy, net investment income came in at RM7.50 billion. 

Cautious recovery amid a new normal
“Although we expect continued market volatility, we have also recorded some soft recoveries in various markets since April. With the aggressive plans implemented by major economies to combat the virus and prepare for a post COVID-19 recovery, we are hopeful to see market sentiments improving in the near future. 

As a long-term provident fund with a global investment footprint, the EPF always employs strict discipline in all our investment decisions, guided by a long-term strategy which ensures that we remain cautious and not make rash decisions based on short term market reactions. Hence, we are well-positioned to not only ride out the current volatility but also to take advantage of the declines in valuations of fundamentally strong assets,” Alizakri said. 

He also added that the EPF is making the most out of the current headwinds in global markets with its continued investment presence in overseas markets, which makes up 28.8% of the fund’s total investment assets.

Thanks to the EPF’s Strategic Asset Allocation (SAA), the fund managed to outperform many equity funds despite the market downturn, as the flight to safer assets such as bonds have boosted its fixed income returns and provided a cushion from the decline in equity prices. 

EPF’s SAA allocates 54% to Fixed Income Instruments, 36% to Equities, 6% to Real Estate and Infrastructure and 4% to Money Market Instruments as a reflection of its long-term goals, to ensure prudence and prevent overreactions to market movements. 

Striking a balance between members’ long-term interest and short-term needs
Against the backdrop of the pandemic, the EPF swiftly adapted its services and products to balance the immediate and real cash-flow needs of members while fulfilling its mandate to protect their future retirement savings.

In March, the EPF lowered the statutory employee’s contribution rate from 11% to 7% to assist in supporting members’ monthly disposable income. Following this and as a response to members’ urgent cash requirements during the Movement Control Order (MCO), the fund had allowed for members to temporarily access part of their retirement funds in Account 2 via the i-Lestari Withdrawal facility. As at 5 June 2020, a total of 4.1 million applications were made with RM1.94 billion withdrawn.

The fund also recognised the urgent need of employers in managing their immediate cash-flow positions. To address this issue, the EPF launched the Employer COVID-19 Assistance Programme (e-CAP) in April to allow the deferment and restructuring of employers’ contributions to workers’ EPF savings. By 5 June 2020, the fund had approved 6,500 employer applications with a value of RM42.9 million. 

Alizakri said, “These initiatives were extended as we fully empathise with the profound challenges our members were facing, amplified by the uncertainty in their employment and financial prospects particularly during the MCO quarantine period and subsequent economic slowdown.”

“The first quarter results are illustrative of the fact that the world and how we live are now forever transformed. While we still do not know how long the pandemic will last, nor the full extent of the economic fall-out, we believe the situation will eventually stabilise. Still, it is critical that we learn our lessons and adapt accordingly so that we can take advantage of the opportunities the COVID-19 crisis has presented. We must redesign our global infrastructures as well as economic and social models for a better future for all of us,” Alizakri concluded. 

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The EPF’s Q1 2020 results

Portfolio

Asset % of total investment asset

Gross Investment Income (RM billion)

As % of income

Equities

36

6.32

52

Fixed Income Instruments*

54

4.87

40

Money Market Instruments

4

0.43

4

Real Estate & Infrastructure

6

0.54

4

Total

100

12.16

100

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

 

Issued by the EPF Media Desk

Corporate Affairs Department

14 June 2020

 

 

About the Employees Provident Fund (EPF)

The Employees Provident Fund (“EPF”) is one of the oldest retirement funds in the world. Established in 1951, the EPF is a social-security organisation focused on safeguarding member savings and delivering excellent services. In recent years, in line with its vision of helping members achieve a better future, the EPF has expanded its role to encompass the creation of a comprehensive social well-being ecosystem. Today, the EPF remains steadfast in its commitment to members through consistent efforts to update and improve itself, in order to build the foundation for sustainable, holistic and equitable well-being for all Malaysians