Malaysian pension fund Employees Provident Fund (EPF) has recorded a 58% growth in gross investment income at 19.29 billion ringgit ($4.68 billion) for the first quarter ended March 31, 2021, against 12.16 billion ringgit ($2.95 billion) in the corresponding period last year.
The fund, however, maintains a “cautious” stance for the coming quarter amid the downside risks due to the new infectious Covid-19 variants.
“EPF’s solid performance for the first quarter was a spillover from the global economic recovery that began in the second half of last year. We believe that the vaccination rollouts, as well as supportive fiscal and monetary policies worldwide, will play a key role in facilitating economic activities and growth,” EPF Chief Executive Officer Amir Hamzah Azizan said.
“The inflationary concerns did not derail the positive trend in the equity markets, and we took advantage of the opportunity to reposition our holdings in stocks that are fundamentally strong but undervalued,” he added.
According to an EPF statement, equities registered 14.28 billion ringgit ($3.46 billion) in income during the first quarter, accounting for 74% of total gross investment income, while fixed income instruments continued to contribute a stable income of 3.92 billion ringgit ($0.95 billion). In 1Q 2020, equities posted an income of 6.32 billion ringgit.
Meanwhile, income from real estate and infrastructure, as well as money market instruments, stood at 0.71 billion ringgit ($0.17 billion) and 0.38 billion ($0.09 billion) ringgit respectively. Real estate and infrastructure income stood at 0.43 billion ringgit in the same period last year.
After the cost write-down on listed equities, the fund recorded a net investment income of 19.24 billion ringgit ($4.67 billion) against 7.50 billion ringgit ($1.82 billion) in the corresponding period last year.
“While the EPF remains cautious for the coming quarter, given the downside risks of the new highly transmissible COVID-19 variants, we assure members that we continuously take the necessary measures to protect members’ savings, supported by our strong governance framework, as we strive to meet our mandate and strategic targets of providing members with a sustainable retirement,” Amir said.
EPF’s investment assets stood at 981.71 billion ringgit ($239.69 billion) as of end-March 2021, of which 36% was invested overseas.
The diversification in different asset classes, markets, and currencies continues to provide income stability and added value to the fund’s overall returns. During the first quarter, the EPF’s overseas investments generated an income of 11.15 billion ringgit ($2.71 billion), or 58% of the total gross investment income recorded, mainly driven by foreign equities, the fund said.
By asset class, fixed income instruments made up 46% of investments while equities comprised 44%. money market instruments and real estate and infrastructure made up 4% and 6% respectively of investments, EPF said.
The portfolio reflects the EPF’s diversification strategy to optimise returns within tolerable risk limits as guided by the Strategic Asset Allocation (SAA), which has proven to be resilient in the face of any challenging market environment, especially during the COVID-19 pandemic crisis.
Recognising the challenges faced by members during the pandemic, the EPF’s i-Sinar and iLestari facilities were introduced to allow affected members to make withdrawals that would help provide some measure of financial relief.
To date, a total of 57.97 billion ringgit ($14.06 billion) of i-Sinar withdrawals have been approved for 6.49 million applicants, out of which 50.93 billion ringgit ($12.53 billion) have been disbursed, while 20.80 billion ringgit ($5.05 billion) has been paid out to 5.27 million members under the i-Lestari facility.