EPF sees marginal dip in Q2 investment income

PETALING JAYA: The Employees Provident Fund (EPF) reported a total investment income of RM12.32 billion for the second quarter ended June 30, 20149 (Q219), a marginal 0.6% dip from RM12.39 billion recorded in the corresponding quarter of the previous year.

Its deputy CEO (investments) Datuk Mohamad Nasir Ab Latif (pix) attributed the lower earnings to the weak performance of the Malaysian stock market that saw a 1.1% drop in the period compared to previously, which resulted in the EPF’s domestic equity portfolio recording an income of RM1.51 billion.

“The benefit of having a diversified portfolio is that the investment income from overseas assets helped to cushion the decline in income from the domestic equity portfolio. For us at the EPF, the short-term volatility gave us a chance to buy good assets to strengthen the portfolio for the long term,” said Mohamad Nasir in a statement .

Equities, which make up 39.2% of its total investment assets, continues to be the main revenue driver, contributing RM6.33 billion, equivalent to 51.4% of total investment income for the quarter.

Meanwhile, 50.6% of the fund’s investment assets were in fixed income instruments, which continue to provide a consistent and stable flow of income, returning RM5.12 billion, equivalent to 41.6% of the quarterly investment income.

Income from Malaysian Government Securities (MGS) & equivalent in 2Q19 reached RM2.69 billion, while loans and bonds generated an investment income of RM2.43 billion.

For Q219, real estate & infrastructure represented 4.9% of the pension fund’s total investment assets, which recorded a RM460 million income and investments in money market instruments, which represent 5.3% of total investment assets, contributed RM410 million.

Breaking down the contributions, EPF revealed that RM890 million from the RM12.32 billion gross investment income was generated for Simpanan Shariah, and RM11.43 billion for Simpanan Konvensional.

For the remaining quarters Mohamad Nasir said that market conditions for the rest of the year will continue to be extremely challenging and volatile.

“There are a lot of uncertainties, especially around Brexit, the ongoing US-China trade dispute, and growing protectionism in other countries such as Japan and South Korea. We are also keeping a close eye on the possibility of an economic slowdown and the rising risk of recession in major economies, which may have a knock-on effect on global growth.”

source https://www.thesundaily.my/business/epf-sees-marginal-dip-in-q2-investment-income-NX1347197