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EPF Investment Income Up 26.3 Per Cent To RM5.2b In Q2

The Employees Provident Fund (EPF) reported an investment income of RM5.2 billion during second quarter 2008 (Q2), representing a 26.3 per cent increase in performance compared to the previous quarter. The bulk of this improvement was attributed to income from equities, which doubled from RM1 billion to RM2.1 billion for the period under review.

In the unaudited Q2 results, the EPF’s investments in equities showed that most of the investments were made in Trade and Services, and Finance sectors.  Investment in Trade and Services sector increased 2.4 per cent to 37.8 per cent while Finance sector decreased by 3.8 per cent to represent 34.2 per cent of total equity investments. Meanwhile, equity investments in other sectors remained generally unchanged.

“Despite the challenging economic scenario, the EPF has managed to register strong earnings growth quarter on quarter,” said Datuk Azlan Zainol, Chief Executive Officer of the EPF. “We will continue to monitor the equities market carefully as it has been an important source of income growth for the Fund.”

Income from Loans and Bonds in Q2 was higher by 4.2 per cent, to record RM1.6 billion in earnings. However, income from Malaysian Government Securities (MGS) and Money Market Instruments was lower in Q2.  Income from MGS declined by RM37.4 million or 3.0 per cent to RM1.2 billion, while income from Money Market Instruments fell by RM18.2 million or 8.7 per cent to RM191.5 million. 

During the quarter under review, income from property investments increased by 15.2 per cent from RM19.7 million in Q1 to RM22.7 million in Q2. 

With a fund size of RM328.2 billion and growing, the EPF remains prudent in making investment decisions, striking a balance between minimizing risk and maximizing returns.  During Q2, RM130.4 billion or 39.7 per cent of its funds were allocated to Loans and Bonds while RM107.3 billion or 32.7 per cent were invested in MGS. Together, these two investment categories make up over 70 per cent of funds allocated by the EPF.

Datuk Azlan said, “In keeping with our responsibility to protect the country’s premier pension fund, we will continue to keep most of our investments in low risk products such as MGS and Loans and Bonds.” 

The total asset allocation of the EPF for the second quarter ended 30 June 2008 is as follows:

Types of Investment

RM Billion

Percentage

Malaysian Government Securities

107.3

32.7%

Loans and Bonds

130.4

39.7%

Equities

73.2

22.3%

Money Market Instruments

15.5

4.7%

Properties

1.8

0.6%

Total

328.2

100.0%


The composition of MGS showed that 64.8 per cent of these investments have a maturity between one to five years, an increase of 4.0 per cent for the quarter.  The proportion of MGS with maturity tenures of six to ten years and 11 to 20 years has reduced by 3.7 per cent and 0.3 per cent respectively.

 

In line with the EPF’s prudent investment strategy, 84.5 per cent of funds invested in Loans and Bonds were allocated to high-grade companies with AAA and AA rating.   

“As a pension fund, the EPF will always err on the side of caution when making investment decisions.  We continue to be committed in enhancing the value of members’ savings through investments that provide steady returns and opportunities for growth,” concluded Datuk Azlan.

About the Employees Provident Fund (EPF)
The Employees Provident Fund (EPF) is Malaysia’s premier pension fund, providing basic financial security for retirement. The Fund is committed to preserving and growing the savings of its members in accordance with best practices in investment and corporate governance. It will always be guided by prudence in its investment decisions.

As a customer-focused organization, the EPF delivers efficient and reliable services for the convenience of its members and registered employers.

The EPF continues to play a catalytic role in the nation’s economic growth, consistent with its position as a leading savings institution in Malaysia.

Date: 3 September 2008

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