EPF investment income falls 10.5pc in Q1

Improving outlook on the external front, strong domestic fiscal impulse and ample liquidity are expected to help bolster the performance in the second half of 2009, says its CEO
The Employees Provident Fund (EPF) said investment income for the first three months this year fell 10.5 per cent from the fourth quarter of 2008 as it made less money from the bond and stock markets.

However, it is hopeful of better market conditions in the second half of 2009 due to signs the global economy may be recovering and the Malaysian government's measures to stimulate the economy.

"The market condition is expected to remain challenging in the near term following the impact of the global recession on the domestic economy."However, improving outlook on the external front, strong domestic fiscal impulse and the existence of ample liquidity are expected to help bolster the performance in the second half of 2009," Tan Sri Azlan Zainol, chief executive officer of the pension fund said in a statement yesterday.

Total investment income was RM3.26 billion for the first quarter ended March 31, down from RM3.64 billion made in the fourth quarter of 2008.However, when compared with RM3.88 billion it made in the same quarter of 2008, investment income fell 16 per cent.

The highest income contributor was loans and bonds, which provided RM1.78 billion, a drop of 2.2 per cent compared with RM1.82 billion in the fourth quarter of last year.As at March 31 this year, 36.81 per cent of loans and bonds investments was in companies with "AAA" credit ratings and 49.97 per cent was in companies with "AA" ratings.

Malaysian Government Securities (MGS) was the second highest income earner in the first quarter, returning RM1.11 billion, a drop of 13.23 per cent from RM1.28 billion."Despite the drop in earnings from loans and bonds and MGS this quarter, we will continue to invest in these investments as they provide capital preservation and the stability of returns, which is in accordance with our investment mandate that favour low-risk instruments," Azlan said.

During the quarter, equities contributed RM223.83 million after the fund set aside money to cover the fall in share prices. EPF made RM342.54 million in the previous quarter.The EPF continued to invest in blue-chip stocks with a strong focus in two sectors - 37.43 per cent was in trade and services sector and 33.93 per cent was in the finance sector.