[UPDATED] EPF Q1 2022 total investment income down RM3.44 bil from Q1 2021

KUALA LUMPUR – The Employees Provident Fund (EPF) recorded a lower total investment income of RM15.85 billion in Q1 2022 ended March 31, 2022, lower than the RM19.29 billion in the corresponding quarter last year, decreasing by RM3.44 billion.

“The decline was attributed to a number of developments stemming from geopolitical tensions, impact from soaring inflation rates, and interest rate hikes. 

“The Russia-Ukraine war only exacerbated the situation, causing further uncertainty and volatility at a time when countries are still struggling to recover from high debt burdens and stretched public finances from the pandemic,” said its CEO Datuk Seri Amir Hamzah Azizan in a statement today.

Although earnings generation from equities, which continued to be EPF’s main income contributor, was impacted by the market slowdown, he said EPF managed to leverage its portfolio position to capitalise on additional gains.

During the quarter under review, equities contributed RM10.46 billion in income, accounting for 66% of total gross investment income. After taking into account the cost write-down on listed equities, net investment income for the asset class generated RM9.37 billion for the period.

As for the weak equity market performance, Amir said EPF will continue to rebalance the fund’s positions in stocks that are fundamentally strong but undervalued.

Meanwhile, he added that the four pandemic-related withdrawal facilities – i-Lestari, i-Sinar, i-Citra, and Special Withdrawal – had helped tide members over during the pandemic, but now that the country has entered the endemic phase, focus would be on helping members rebuild their savings.

“Any further withdrawals would financially impact EPF and weaken the fund’s current portfolio position and capacity to ensure sustainable returns. We will strive to ensure the health of our finances and globally diversified portfolio, guided by our strategic asset allocation, so that we are able to ride out volatilities in pursuit of our long-term portfolio objectives.”

A total of RM1.09 billion was written down for listed equities during the quarter, netting the total net investment income in Q1 2022 to RM14.76 billion. (Writing down is an internal policy adopted by the EPF on its listed equity investment as a measure to ensure the portfolios remain healthy.)

Fixed income instruments, comprising Malaysian government securities and equivalent, as well as loans and bonds, contributed a steady income of RM4.75 billion, or 30% of the gross investment income. 

The income recorded was higher compared to RM3.89 billion generated in Q1 2021, largely due to higher market yield in Q1 2022, compared to the same period last year.

Real estate and infrastructure registered a decrease in income to RM360 million, from RM710 million in the corresponding period in 2021. Income from money market instruments stood at RM280 million, from RM380 million in Q1 2021.

As of March this year, the EPF’s overall investment asset grew to RM1.02 trillion, of which 37% was invested in overseas investments. In Q1 2022, the EPF’s overseas investments generated RM8.23 billion in income, representing 52% of the total gross investment income recorded.

A total of RM1.88 billion out of the RM15.85 billion gross investment income was generated for Simpanan Shariah (shariah savings), and RM13.97 billion for Simpanan Konvensional (conventional savings). – The Vibes, June 21, 2022