EPF's investment income up 7.64% in second quarter

PETALING JAYA: The Employees Provident Fund (EPF), which posted a 7.64% increase in total investment income for the second quarter ended June 30, 2018, sees the domestic outlook turning favourable on the back of easing foreign outflows and clearer policy direction from the new government.
"The EPF remains focused in delivering above-inflation returns, with at least 2% above the inflation rate over a three-year rolling period, which will preserve and enhance the value of our members' retirement savings," deputy CEO (investment) Datuk Mohamad Nasir Ab Latif said in a statement today.
Despite a higher investment income of RM12.39 billion for the April-June period, the value of EPF investment assets saw a marginal drop of 0.1% to RM813.18 billion compared with the RM814.38 billion in the first quarter of 2018 due to the drop in value of investments in equity markets.
The EPF stressed that its asset position remains healthy compared with members' savings balance of RM780.07 billion. Of the total investment assets, RM322.89 billion or 39.71% were in syariah-compliant investments and the rest conventional.
For the quarter under review, investment income from equities, which made up 40.61% of the EPF's total investment assets, rose 29.1% to RM7.98 billion versus the same quarter last year. Income from Malaysian Government Securities and equivalent increased 14.6% to RM2.4 billion.
Real estate and infrastructure, however, saw its income plunge 87.2% to RM91.73 million year on year, but it was an improvement compared with the RM107.38 million deficit in Q1 2018.
Loans and bonds contributed income of RM1.7 billion, down 22.8% from the same quarter last year, while money market instruments declined 29.1% to RM215.44 million.
Overall, EPF said, the investment income was achieved amid less favourable trading environment in the domestic market due to capital outflows from emerging markets, including Malaysia, as a result of the escalating US-China trade tensions and the US interest rate increases.
Mohamad Nasir cautioned that global market uncertainty continues to shroud the outlook for the rest of the year given the continued political and policy risks such as the impending changes to monetary policies, uncertainty over the outcome of Brexit and the ongoing trade tensions between major economies.
A total of RM1.09 billion, out of the RM12.39 billion gross investment income, was generated for Simpanan Shariah and RM11.30 billion for Simpanan Konvensional.
As at end-June 2018, the EPF's overseas investments, which accounted for 26.50% of its total investment asset, contributed 38.30% to total investment income in the second quarter.