Thanks to a low-base effect and improved performance in most equity markets, the Employees Provident Fund (EPF) saw its investment income grow 29.2% to RM12.32bil for the third quarter ended Sept 30, 2016, from RM9.54bil in the corresponding quarter last year.
During the period in review, the country’s largest pension fund saw its investment assets expand 4.1%, or RM27.98bil, to RM712.5bil from RM684.52bil as at end-December 2015.
“Given the overall poor performance in the third quarter of 2015, the improved year-on-year performance in the third quarter of 2016 is accentuated by a low base.
“Nonetheless, most equity markets recorded an improvement resulting in outperformance in the third quarter this year compared with the corresponding quarter last year,” EPF chief executive officer Shahril Ridza Ridzuan said in a statement.
“Our overseas investment continued to enhance our return during the quarter, while non-cash impairments also recorded a significant reduction from last year,” he added.
For the quarter in review, the EPF’s non-cash impairments stood at RM349.59mil, which was a significant improvement from the RM1.02bil reported in the corresponding quarter last year.
Equities, which made up 41.24% of the EPF’s total investment assets, contributed RM7.02bil, or 56.96% of total investment income for the quarter.
This was 49.02% higher than the RM4.71bil in the corresponding quarter last year.
Shahril attributed the increase in income in the third quarter to the improvement in equity prices, mainly in the North Asian and developed markets, which provided opportunities for the EPF to realise higher trading income.
As at September 2016, a total of 49.76% of the EPF’s investment assets were in fixed-income instruments, which continued to provide consistent and stable income. For the quarter, fixed-income investments generated RM4.52bil, equivalent to 36.65% of its quarterly investment income.
In the three months to September 2016, the EPF’s income from Malaysian Government Securities and equivalents rose 7.21%, or RM131.37mil, to RM1.95bil from RM1.82bil in the previous corresponding quarter, while loans and bonds generated an investment income of RM2.56bil, compared with RM2.54bil previously.
Meanwhile, investments in money market instruments and real estate and infrastructure, which represented 5.19% and 3.80% of the EPF’s total investment assets, respectively, contributed an investment income of RM295.66mil and RM478.22mil in the third quarter of the year.