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KUALA LUMPUR: The Employee Provident Fund recorded a gross investment income of RM17.33 billion in the third quarter ended September 30, 2020, which was 28.37% higher than the RM13.5 billion recorded in the same quarter last year.
In quarter-on-quarter terms, it was a 14.6% improvement from RM15.12bil in the immediately prior quarter.
For the quarter under review, the pension fund said equities contributed RM7.29 billion or 42% of total gross investment income, while fixed income instruments contributed RM8.18 billion.
This was followed by real estate and infrastructure that contributed RM1.63 billion and RM230 thousand of money market instruments.
Net investment income after impairment and amortization costs for the listed shares was RM16.87bil.
“This year has seen great volatility in the financial markets that saw very rapid movements from one extreme to the other.
“Our financial positions during the first three quarters have been affected by volatility in market sentiments exacerbated by the uncertainties of the Covid-19 pandemic and fragile consumer sentiments,” said EPF CEO Alizakri Alias, it’s a statement.
The EPF said the global equity indices tracked by the EPF have rebounded closely from their lowest in March, but many have yet to rebound to the pre-pandemic levels seen in late 2019.
He added that the widespread drop in yields has provided the opportunity for the EPF to increase business activities and capitalize on earnings, but is cautious with the lower reinvestment yield and remains careful to ensure that the long-term health of the portfolio does not be compromised.
At the end of September 2020, the investment assets of the EPF amounted to RM 941.77 billion, of which 68% was allocated to the domestic market, while 32% was allocated to foreign markets, which contributed with 45% to gross investment income for the third quarter.
By asset class, fixed income instruments accounted for 49% of investments, while equities accounted for 39%. Money market instruments and real estate and infrastructure accounted for 7%
and 5% respectively of the investments.
“While we remain guided by our SAA, a lot really depends on swift and effective responses to the COVID-19 pandemic that must address the massive impact on the economy and ensure continuity of businesses, jobs and lives,” Alizakri said.
He added that infections are on the rise again even as economies struggle to recover from the lockdown, creating a serious impediment to economic recovery to pre-pandemic levels.
As such, the EPF expects interest rates to remain low for longer as central banks continue to ease monetary policy to support their respective economies.
Alizakri noted that the continuing uncertainties will affect external demand from Malaysia, which is a country dependent on trade.
This could affect the labor outlook and slow down national economic activities, he said.
“Throughout this challenging year, we remain steadfast in our commitment to helping our members achieve a better future and also safeguarding their long-term retirement savings by preserving capital and safely navigating this volatile period.
“This will be achieved by always ensuring that the profits generated by our investments are realized in a healthy and sustainable manner, with prudence in amortization and the proactive practice of impairment measures at all times,” he added.
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