EPF’s 2Q investment income up 47%

Tags: EPF | equity investment | MGS | Second quarter | Tan Sri Azlan Zainol

Written by Yong Yen Nie
Friday, 04 September 2009 11:59

KUALA LUMPUR: The Employees Provident Fund’s (EPF) investment income for the second quarter (2Q09) rose 46.6% to RM4.8 billion from RM3.27 billion in the previous quarter, mainly due to improved performance in its equities portfolio.

In a statement here yesterday, EPF said earnings from equity investment grew seven times to RM1.74 billion in 2Q09 from RM239.55 million in 1Q09. As at 2Q09, EPF had invested RM93.9 billion in equities, representing 26.53% of its total fund size.

EPF said improving global stock markets, as well as Bursa Malaysia, had contributed to the surge in income from equities in 2Q09.

Commenting on EPF’s higher investment income, its chief executive officer Tan Sri Azlan Zainol said: “The second quarter of 2009 showed signs of recovery in major global equity indices, especially in the countries that EPF invests in.

“While we cannot say that the worst is over, should this trend continue, or at least maintain at the current level, we are positive that we can reverse the bulk of the allowances for diminution in value of equity investments that we made last year.”

EPF’s total fund size stood at RM353.93 billion, up 1.61% from RM348.31 billion in 1Q09.

During 2Q, loans and bonds were the highest earners, with RM1.81 billion compared with RM1.78 billion in the previous quarter. EPF’s largest investment was in loans and bonds, with 41.18% of its total fund size, or RM145.75 billion, invested in the two asset classes.

EPF said it had maintained a low-risk loans and bonds profile by investing mostly in high-grade companies with AAA or AA ratings.

Income from Malaysian government securities (MGS) rose marginally by RM830,000 to RM1.11 billion in 2Q09 from the previous quarter. EPF allocated RM97.46 billion for investing in MGS, which is about 27.54% of its total fund size.

Azlan said despite the instability of the global economy, the EPF had managed to meet expectations and deliver better investment results in 2Q09.

“This reflects the value of our disciplined approach in managing risks and returns for our members. Although higher returns are desirable, we must not lose sight of our priority to provide capital preservation and stability of returns,” he said.

Income from money market instruments fell 21.5% to RM94.3 million from RM120.11 million in 1Q09. Investment in PROPERTIES [] contributed RM20.81 million to its income in 2Q09 compared with RM20.63 million in the previous quarter.

The fund had invested RM15.2 billion or 4.29% of its total funds in money market instruments, as well as RM1.62 billion in properties.

Azlan said: “While there are signs of stabilisation in the global markets, it is too early to see how this will affect us for the remainder of the year.

“Bear in mind that things can take a different turn at any time and any decision making must be exercised with care for the best interest of EPF contributors.”

Nevertheless, as a long-term investor and custodian of a more than RM350 billion retirement fund, EPF would continue to take proactive measures to enhance the value of its members’ savings in these trying times while still upholding a prudent approach, he said.