EPF’s investment income declines 21% to RM27 bil in first half of 2022
Consistent global downtrend influences equity earnings, says CEO
KUALA LUMPUR – The Employees Provident Fund’s (EPF) registered a total investment income of RM27.0 billion for the first half of 2022 (H1 2022), a decrease of RM7.06 billion, or 21%, compared to RM34.06 billion in the corresponding period in 2021.
Total gross investment income for the second quarter of 2022 (Q2 2022) also went down RM3.63 billion to RM11.14 billion from RM14.77 billion recorded in the same quarter last year.
Equities continued to be the main contributor of income for Q2 2022 at RM4.88 billion, accounting for 44% of the total gross investment income in the quarter under review, the retirement fund said.
Chief executive officer Datuk Seri Amir Hamzah Azizan said expectations of global growth have suffered, which caused a persistent sell-off in the global markets.
“The consistent downtrend impacted EPF’s equity earnings, especially through global stock markets which declined between 17% and 21% during H1 2022.
“Nonetheless, the EPF’s diversification into different asset classes, markets and currencies, as prescribed in its strategic asset allocation, has helped the EPF to remain resilient against turbulent market conditions and to protect its long-term investment returns,” he said in a statement today.
EPF said private equity has managed to deliver healthy returns of RM1.15 billion, an increase of over 100% against RM0.54 billion recorded in Q2 2021.
Fixed income instruments, comprising Malaysian Government Securities and equivalent, as well as loans and bonds, contributed a significant portion of gross investment income for Q2 2022, at 42% of total income or RM4.73 billion.
“Real estate and infrastructure registered an income of RM1.20 billion, while income from money market instruments generated RM0.33 billion, in line with the return expectations set for these asset classes,” it said.
In Q2 2022, the EPF’s overseas investments, which make up 36% of its total investment assets, generated RM5.51 billion in income, representing 49% of the total gross investment income recorded.
A total of RM1.16 billion out of the RM11.14 billion gross investment income was generated for Simpanan Shariah in Q2 2022, and RM9.98 billion for Simpanan Konvensional.
Taking into account the effect of the RM2.15 billion that was written down for listed equities during the quarter, the EPF’s total investment income in Q2 2022 was RM8.98 billion.
As at June 2022, the EPF’s assets under management were RM957.25 billion, taking into account the pandemic-related withdrawals amounting to RM44.6 billion.
“However, the EPF’s asset growth remained healthy as contributions received amounting to RM43.23 billion as of June 2022, supported by the income generated from its investments,” it added.
On prospects, the EPF maintained its positive outlook on the home front, believing that Malaysia’s economic recovery would continue further for the remainder of 2022 following stronger gross domestic product growth of 8.9% for the second quarter.
“Nonetheless, the EPF remains cautious of key risks that continue to rattle markets and investor sentiment,” it added.
Meanwhile, the EPF highlighted that its membership showed a gradual and stable growth over the past five years, with a compound annual growth rate of 2.0%.
This was attributed to the strong growth of new member registrations of 177,230 in Q2 2022, bringing the total for H1 2022 to 323,416 and the total number of EPF members as at June 2022 to 15.5 million.
“Out of that amount, a total of eight million were active members, the highest recorded in the last five years, from 7.2 million in 2018,” it said.
The retirement fund also noted that the take-up rate for both EPF voluntary contribution programmes also showed significant improvement.
i-Saraan new registrations have increased from 17,142 in H1 2021 to 311,028 in H1 2022, while Kasih Suri Keluarga Malaysia KWSP new registrations rose from 1,521 to 33,875 during the same period.
– Bernama, October 7, 2022