KUALA LUMPUR – The Employees Provident Fund has posted a total gross investment income of RM48.02bil for the nine months ended Sept 30, 2021, which was 7.7% improved over RM44.6bil in the same period in 2020.
In a statement, the retirement fund said there was a write down of RM350mil for listed equities in the nine months period, resulting in a net investment income of RM47.67bil compared to RM38.14bil in the same period in the previous year.
For the third quarter alone, the retirement fund recorded a total gross investment income amounting to RM13.97bil, which was lower than RM17.33bil posted in the corresponding quarter of the previous year.
“The third quarter of 2021 has been volatile for equities in both the domestic and emerging markets, largely caused by the concerns surrounding rising inflation and interest rates.
“On the other hand, the continued recovery of equities in the developed economies amidst the heightened volatility has provided EPF the opportunity to capitalise additional gains,” said EPF CEO Datuk Seri Amir Hamzah Azizan in a statement.
The EPF said equities remained its main income contributor, accounting for 54% of total gross investment income of RM7.5bil in Q3.
In the quarter, RM110mil was written down for listed equities in the quarter compared to RM130mil in the previous corresponding quarter, resulting in a net investment income of RM13.86bil.
Meanwhile, fixed income instruments contributed RM5bil or 36% to Q3 gross investment income, which was lower than RM8.18bil income generated in the same quarter in 2020 due to lower trading gains.
It added that this was in line with the higher market yield in Q3 compared to the same period in the previous year.
“Continued inflationary pressure and aggressive shifts from central banks had led yields to increase during the quarter amid increased expectations for monetary policy tightening.
“The environment of increasing bond yields has not just impacted bond markets, but created unease in equities as well,” said Amir Hamzah.
Real estate and infrastructure as well as money market instruments contributed RM1.18bil and RM290mil respectively.
The EPF said investment assets stood at RM988.55bil, of which 36% was invested in overseas instruments.
In 3Q, the overseas instruments generated RM8.1bil in income, which represented 58% of the total gross investment income.
A total of RM1.4bil out of the RM13.97bil gross investment income was generated for Simpanan Shariah, and RM12.57bil for Simpanan Konvensional.
On outlook, the EPF said the post-lockdown recovery continues to grow at a slower pace despite concerns over the monetary policy and inflation outlook.
However, it said risks to Malaysia’s economic growth outlook remain tilted to the downside on externa and domestic factor amid lingering Covid-19 concerns.
The emergence of new infectious or vaccine-resistant variants of the COVID-19 virus is one of the key downside risks to economic growth and market recovery.
“Concerns over inflation and the tightening of monetary policy will continue to cause uncertainty and volatility in both the equity and bond markets,” said Amir Hamzah.
He added that the EPF will refresh its mandate to remain relevant to more Malaysians in the informal sector as well as contract for service workers, which now form the majority of the country’s labour force, in order to ensure access to at least a minimum standard of living.