EPF Q2 investment income up nearly 10% to RM11.4b

KUALA LUMPUR: The Employees Provident Fund’s (EPF) investment income rose 9.73% to RM11.41bil in the second quarter ended June 30, 2015, with equities accounting for 61% of total income.

It said on Friday the income was up from RM10.40bil a year ago.

“With regard to the first half cumulative year to date June 30, 2015 (1H 2015), the EPF recorded RM22.04bil, a 14.60% increase, compared with the same period in 2014 which recorded RM19.23bil,” it said.

As at Q2, 2015, the EPF’s total investment assets stood at RM667.21bill, up RM30.68bil for the first six months of 2015.

“During the quarter under review, equities, which made up 43% of the fund’s total investment assets, continue to emerge as the top investment income contributor of RM6.97bil, representing 61.05% of total income.

“This was 6.90% higher compared with RM6.52bil recorded in the same corresponding period in 2014,” it said.

Fixed income investment, which accounts for 51% of EPF’s investment asset size, continued to provide steady stream of income amid the low interest rate environment and uncertainties in investment markets.

Malaysian Government Securities generated RM1.79 billion worth of income during Q2, 2015, up 3.98% or RM68.44mil, compared with RM1.72 billion in the same corresponding period in 2014.

Loans and bonds recorded an investment income of RM2.02bil, compared with RM1.87bil in Q2 2014, while money market instruments contributed RM190.89mil in income.

As for real estate and infrastructure, it was 3% of EPF’s total investment assets as at June 2015. Income was RM444.46mil compared with RM184.12mil a year ago.

EPF chief executive officer Datuk Shahril Ridza Ridzuan said, “Despite very challenging conditions, our performance for the first six months of 2015 was strongly supported by our well diversified portfolio and the strengthening of the USD had also enhanced the returns from our international investments.”

As at June 2015, EPF’s global investments made up 25% total investment assets and contributed more than 40% to the fund’s total cumulative year to date income.

“While we were able to maintain the previous quarter’s momentum, we are currently seeing greater volatility in the financial markets. The anticipation of interest rate hike in the US as well as economic slowdown in China and other emerging countries are the prevailing concerns. It will be challenging for the EPF to sustain the first half’s momentum for the remaining part of the year,” he said.

However, Shahril pointed out the current market conditions allowed the fund to rebalance its portfolio for continuous return and risk diversification over the long run.

“With our long term investment horizon, the current situation presents good opportunities for us to capitalise on undervalued and fundamentally strong domestic and global assets.”

The Star