[ad_1]
KUALA LUMPUR: The Employee Provident Fund (EPF) posted a gross investment income of RM15.12bil in the second quarter ended June 30, 2020 during extremely volatile and challenging conditions.
In a statement issued Saturday, the retirement fund said the shares, which contributed 54% of total gross income, posted RM8.11bil in investment income.
This was followed by fixed income instruments, which contributed 6.17 billion ringgit. Real estate and infrastructure, as well as money market instruments, contributed RM470 thousand and RM370 thousand respectively.
However, net investment income fell to RM13.46 billion following the amortization of the costs of listed shares, which the EPF described as a prudent practice to ensure that its long-term investment portfolio remains healthy. .
EPF Director Tunku Alizakri Alias said the extremely volatile and challenging conditions observed since early 2020 showed no signs of normalization.
He cited ongoing issues, such as trade tensions between the United States and China and low oil prices, remain unresolved and Covid-19 continues to wreak havoc in unprepared countries around the world.
“The major economies had been locked in and closed borders meant that supply chains were disrupted, causing slowdowns in many sectors and industries.”
“The EPF’s strategic asset allocation framework, which guides us in how we structure our investments and portfolio, served us well during the tumultuous first half of the year. For example, our exposure to fixed income instruments allowed us to overcome the initial drop at the beginning of the quarter.
“We then saw a bullish move in stocks towards the end of the quarter as both the FBM KLCI and global markets began to improve as economies gradually but cautiously reopened.
“Moving forward, we remain cautious as a second wave of Covid-19 remains a possibility that will have a large negative multiplier impact on the already weak economic conditions faced by many countries that have not yet emerged from the first wave.
Tunku Alizakri said EPF’s Strategic Asset Allocation (SAA) allocates 51% to fixed income instruments, 36% to stocks, 10% to real estate and infrastructure, and 3% to money market instruments as a framework. to optimize your long-term returns within tolerable risk limits. .
He said EPF’s overseas diversification strategy guided by the SAA has helped add value to its overall performance.
At the end of June 2020, the investment assets of the EPF amounted to RM929.64bil, of which 30% was invested in investments abroad.
As of 2Q, 39% of the total gross investment income recorded was contributed by investments abroad by the EPF.
Overseas revenue was boosted by a recovery in world equity markets in the second quarter, allowing the EPF to overcome the decline during the first quarter of the year.
Fixed income also contributed to higher earnings due to the underperforming environment, which provided more opportunities for the fund to realize its earnings.
On the outlook for the remaining half of 2020, Alizakri said: “We remain cautious, as even though more countries are easing their quarantine restrictions and markets reopen their businesses, the Covid-19 vaccine remains promising. that will not be fulfilled. ” fulfilled in the immediate future.
He cited Australia’s state of Victoria, which had once again been blocked in early July, and New Zealand and Hong Kong reviewing their control measures.
(EPF Director Tunku Alizakri Alias said that at the end of June 2020, EPF’s investment assets amounted to RM929.64bil, of which 30% was invested in overseas investments.)
“In light of the unprecedented situation, we believe we have achieved a satisfactory performance, balancing the urgent liquidity needs of our members with the long-term responsibility of ensuring financial adequacy at retirement and sustainable returns on investment.
“Going forward, it will be even more crucial for the EPF to continue to invest in fundamentally strong assets, especially those companies that have demonstrated a pivotal ability to adapt to the new norm.”
Tunku Alizakri said the EPF has also committed to accelerating the adoption of environmental, social and governance (ESG) criteria as a central part of its investment decision-making process.
“In light of the growing uncertainties and volatilities that are becoming the norm, strong ESG practices will become a requirement as we believe it will allow economies, industries and businesses to be more adaptable and resilient in times of crisis, ”he said.
[ad_2]
