PETALING JAYA: The Employees Provident Fund (EPF) recorded total investment income of RM33.19 billion for the first half of the year ended June 30, 2023 (H1’23), an increase of RM9.44 billion, compared with the RM23.75 billion recorded in the corresponding period in 2022.
The amount was after netting off listed equity write-downs recorded for the period under review. Of the RM33.19 billion, RM4.79 billion was generated from mark-to-market (MTM) gains of securities that have not been realised. The MTM gains were mainly due to fluctuation of foreign exchange rates.
EPF’s total investment income for the second quarter (Q2’23) was RM18.03 billion, up RM9.05 billion from RM8.98 billion recorded in the same quarter last year.
Equity investments continued to be the main contributor of income for the second quarter at RM9.6 billion.
Due to active portfolio management by EPF’s fund managers, write-downs for Q2’23 were minimal at RM0.35 billion, compared with RM2.15 billion recorded in the same quarter of 2022.
EPF CEO Datuk Seri Amir Hamzah Azizan said, “The performance of the global equity markets in the first half of 2023 had been positive, led by a run-up in the developed markets, notably in the US which continues to show resilience despite the rise in interest rates.
“The EPF’s agility and adaptability in its investment strategy paved the way for the investment managers to take advantage and capitalise on the market rally, which contributed to the higher return from equities during the period. This is in contrast to the equity market performance seen in the first half of 2022, which saw several indices suffering significant declines, with most markets including the US posting their worst first-half performance in decades.
“For Malaysia, the 5.6% GDP growth in the first quarter of 2023 had surpassed expectations, driven mainly by firm domestic demand and improvement in the labour market. Resilient growth tempered tighter financial conditions, providing a floor for the domestic capital markets.”
Fixed income instruments, which serve as a capital preservation role, have been the anchor for EPF’s investment portfolio and continues to provide stability for the retirement savings fimd’s overall income. This asset class, comprising Malaysian Government Securities and equivalents, as well as loans and bonds, contributed 27% or RM4.83 billion, to EPF’s total investment income for Q2’23. Real estate and infrastructure registered an income of RM2.72 billion, while income from money market Instruments generated RM0.88 billion, in line with the return expectations set for these asset classes.
EPF’s assets recorded strong growth on the back of higher income generated from its investments as well as the healthy net contributions received. As at June 2023, EPF investment assets stood at RM1,082.45 billion, of which 38.6% were invested overseas.
The increase in overseas exposure was largely in part due to positive movement in global markets, pushing valuations of EPF’s investment higher, as well as favourable foreign exchange movements. Excluding the movements of foreign exchange rates during the quarter, EPF’s overseas investments would have been around 37.5%. The fund’s overseas investments generated RM11.07 billion, or 61% of the total investment income recorded.
Meanwhile, EPF’s domestic investments, which accounted for 61.4% of total assets, have grown by RM57 billion compared to one year ago. EPF remains dedicated to supporting and contributing towards strengthening the domestic market by allocating more than 80% of its new annual investments to domestic investment.
During Q2’23, a total of RM16.27 billion out of the RM18.03 billion investment income was generated for Simpanan Konvensional and RM1.76 billion for Simpanan Shariah. Simpanan Shariah derives its income solely from its portion of the shariah segment while income for Simpanan Konvensional is generated by a share of shariah and conventional portfolios.
As at H1’23, EPF membership has grown to 15.9 million. Of that, active members reached an all-time high of 8.47 million.