EPF investment income rises 19.7% to RM9.2bil in Q2

by **Cals** Wed 04 Sep 2013, 07:20

Published: Wednesday September 4, 2013 MYT 12:00:00 AM
Updated: Wednesday September 4, 2013 MYT 7:02:57 AM
EPF investment income rises 19.7% to RM9.2bil in Q2

PETALING JAYA: The Employees Provident Fund (EPF) saw its investment income jump 19.7% in the second quarter ended June 30 to RM9.16bil from RM7.66bil a year earlier on a post-election rally in the equity market.
The pension fund said in a statement yesterday that its income was a whopping 63.5% higher than the RM5.6bil recorded the first three months of the year. This takes its income for January-June to RM14.77bil.
Equities commanded the lion’s share of its second-quarter income at RM5.6bil, up 45.7% from RM3.84bil in the year-earlier period.
The second largest contributor to its income was Malaysian Government Securities and its equivalent at RM1.53bil, climbing 2.3% year-on-year from RM1.49bil.
Next was income from loans and bonds, which registered a dip to RM1.53bil versus RM2.06bil previously because of one-off gains booked in 2012.
“The positive earnings were largely driven by a strong performance in equities, which posted higher returns compared with the second quarter of 2012,” EPF CEO Datuk Shahril Ridza Ridzuan said.
“This increase was predominantly attributed to gains realised in domestic equities when we capitalised on the opportunities arising from improved trade liquidity and market prices in the domestic equity market in May and June following the completion of GE13,” he said.
The value of EPF’s investment portfolio as at June increased 12% to RM554.14bil compared with RM494.84bil earlier, while total contributions received from members of RM13.88bil surpassed withdrawals of RM9.73bil, translating into a net inflow of RM4.15bil.
In the three months to June, EPF said it made an additional US$2.51bil of overseas investments in global equities, bonds and real estate.
“Out of the amount, US$2.15bil was channelled into the global equity mandates to take advantage of opportunities, particularly in developed markets. As at June this year, EPF’s total exposure in global investment assets constituted 20% of its total investment assets based on book value,” the pension fund said.
During the second quarter, EPF said it injected US$1.2bil to external fund managers for global equity mandates, while RM1bil and RM850mil were also outsourced into domestic fixed income and equity mandates, respectively.
“Better prospects of recovery in the US and Japanese economy as well as signs of improvement in the eurozone will help the general economic outlook.
“However, the same recovery is also spurring the movement of capital back to developed markets, particularly on expectations of liquidity tapering. This is already affecting our domestic equity and bond markets with declines in line with the movement of foreign capital to other markets,” Shahril said.
“We believe that Malaysia is well equipped to handle the expected volatility arising from global events and movements of capital. Nonetheless, these recent events have emphasised the importance for EPF to continue a policy of prudent risk management and investment allocations that target an optimal return over a long-term horizon.”