EPF posts RM10.11 billion investment income for 3Q13, rise in trading volume

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KUALA LUMPUR: The Employees Provident Fund (EPF) generated investment income of RM10.11 billion for the third quarter (3Q) ending September 30, 2013, representing a healthy year-on-year (y-o-y) growth of 44 per cent over the RM7.02 billion in the corresponding quarter in 2012.

In a statement issued yesterday on its unaudited investment results for 3Q 2013 (3Q13), EPF chief executive officer Datuk Shahril Ridza Ridzuan said the performance was primarily driven by a more robust equity market on both the domestic and foreign fronts, coupled with a significant rise in trading volume in 3Q.

“We have also benefited from higher dividend payouts from listed companies due to improved earnings,” Shahril Ridza said.

Equities continued to generate a higher proportion of investment income in 3Q13 amounting to RM5.71 billion or an increase of RM3.37 billion compared with RM2.34 billion in the corresponding period in 2012.

Meanwhile, investment income derived from real estate and infrastructure assets surged from RM54.62 million in 3Q12 to RM429.16 million in 3Q13, continuing the growth in performance since 1Q 2013.

The higher income from equities helped offset a fall in income from loans and bonds, which was lower at RM2.28 billion compared with RM3.06 billion in 3Q 2012.

This was reflective of the overall fall in yields for maturing assets that were reinvested and the higher 3Q12 income was also due to one-off capital market transactions which were not repeated in 3Q13.

Malaysian government securities and equivalents in 3Q13 posted RM1.55 billion in income, reflecting a nominal increase of 0.18 per cent compared with 3Q12 while money market instruments contributed RM145.23 million to the 3Q13 income.

“The EPF continues to diversify its investments across markets, sectors and asset classes to provide optimal sustainable returns in the long term.

Our global investments offer stable returns on a long-term basis, befitting our risk-return appetite as a retirement fund.

“We are also able to find opportunities from, and reduce the risk of asymmetric market movements, such as the improvement in global developed economies and the selldown in emerging market currencies,” Shahril Ridza said.

As at 3Q13, the EPF’s total overseas exposure constituted 20.39 per cent of its total investment assets based on book value, registering a rise from 18.97 per cent in 2Q13.

During the quarter under review, an additional US$2.5 billion of overseas investments were made and of the total, US$2.25 billion had been channelled into global equity mandates and the balance invested in global bonds, infrastructure and private equities.

During the same quarter, the EPF also outsourced a further RM1 billion for domestic fixed income mandates.

Shahril Ridza said currently, more than one third of EPF’s total investment assets are shariah compliant.

“The growth in Islamic finance assets globally presents us with the opportunity to further expand our investments into this space.

This is also in line with the fund’s diversification programme to continuously rebalance our portfolios according to our risk-return profile.

“Our efforts in shaping the Islamic finance industry have led us to be awarded the Best Institutional Solutions Provider in the Islamic Finance News (IFN) Islamic Investor Poll 2013,” he said. — Bernama