The Malaysian pension fund Employees Provident Fund (EPF) recorded over 34 billion ringgit ($8.1 billion) worth of total investment income in H1 2021, representing a 25% year-on-year increase.
The government entity said in a statement that the gross investment income for the second quarter this year was 14.77 billion ringgit, which was lower by 0.35 billion ringgit compared to the same quarter last year.
Equities continued to be the main source of income in Q2 2021 at 7.89 billion ringgit, or 53% of total income.
The fund said, in order to ensure a healthy portfolio, it has adopted cost write-downs on listed equities. An amount of 0.21 billion ringgit was written down for listed equities in Q2 2021, compared with 1.66 billion ringgit in the same period in 2020, following the continued recovery across global markets.
“The accelerating roll out of COVID-19 vaccines and the reopening of economies had supported a stronger performance for equities in the developed markets,” commented EPF CEO Amir Hamzah Azizan.
“However, equities in the emerging markets were more muted, due to the resurgence of COVID-19 in Southeast Asian countries and tighter regulations imposed by Chinese authorities on several sectors that had triggered a sharp decline in stock prices,” he added.
Overseas investments accounted for 37% of the $236 billion fund’s assets as of the end of June 2021. In Q2 2021 alone, these investments generated an income of 8.71 billion ringgit, or 59% of the total gross investment income.
Fixed income made up 36% of EPF’s Q2 2021 income, while real estate and infrastructure, and money market instruments recorded 1.4 billion ringgit and 0.2 billion ringgit, respectively.
The EPF said that the diversification into different asset classes, markets, and currencies continued to provide income stability and added value to its overall return.
COVID-19 has led to a significant drop in the number of EPF’s members meeting the basic savings threshold (at 240,000 ringgit at age 55), as well as the increasing need to address retirement security for Malaysia’s gig workers.
The pension fund said it will focus on onboarding the gig workers and members in the informal sectors into the EPF Scheme.
“We will remain focused on our Strategic Asset Allocation and continue to be cognisant of the risk profiles of the markets as they develop so we are able to shift along the way,” said Amir.