KUALA LUMPUR, June 11 – The Employees Provident Fund (EPF)’s investment income dropped 10.47 per cent to RM3.26 billion for the first quarter ended March 31, from RM3.64 billion recorded in the fourth quarter of 2008.
The decline is due to lower investment returns from both fixed income instruments and equities, said EPF in a statement here, today.
The highest income contributor in the first quarter was loans and bonds, which contributed RM1.78 billion, a drop of 2.15 per cent compared to 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 during the period reviewed, returning RM1.11 billion, a drop of 13.23 per cent from RM1.28 billion earned by MGS in the last quarter of 2008.
“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,” EPF’s chief executive officer, Tan Sri Azlan Zainol said in the statement.
During the quarter, equities contributed RM223.83 million after investment provisioning resulting from the decline in equity prices, compared to RM342.54 million in the previous quarter.
The EPF continued to invest in blue-chip stocks with a strong focus in two sectors.
Of the funds invested in the equities market, 37.43 per cent was in trade and services sector while 33.93 per cent was in the finance sector. Smaller investments of less than 10 per cent were made in sectors such as plantation (8.66 per cent), industrial products (6.98 per cent) and construction (4.59 per cent).
“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 market performance in the second half of 2009,” said Azlan.
Money Market Instruments returned RM120.11 million in the first quarter, a drop from RM143.21 million earned in the fourth quarter of 2008.
Properties contributed RM20.63 million to the EPF income down from RM51.32 million earned in the previous quarter.
The EPF’s total fund size currently stands at RM348.16 billion, up 1.93 per cent from RM341.56 billion in the last quarter of 2008.
“The uncertainties surrounding the global economy continue to affect EPF’s investments. We anticipate that it will be a tough year going forward but, as a long-term investor, we look forward to capitalising on the opportunities that these challenging times can bring,” he added. – Bernama
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1. Investments written off.
2. NPL's
3. Provision for NPL's and Investments
4. Overall ROI.