By Lawrence Yong
The Employees Provident Fund’s (EPF) returns from equities investments were cut by half in the first quarter of 2013 due to lacklustre Malaysian stock markets, bringing overall returns from its total portfolio down 28% compared to the same period last year.
The EPF said that for January to March 2013, it generated a total investment income of RM5.60 billion compared with RM7.74 billion recorded in 1Q12. Its equities division performed worst, reaping only RM1.86 billion in income compared with RM3.57 billion in the first quarter of 2012.
Returns from equities fell below loans and bonds investments, the EPF data showed.
“Income in 1Q12 was boosted by one-off gains that were not replicated in 1Q13. A lack of volume on the local Bursa Malaysia in the first quarter also contributed to the decline in earnings this quarter,” EPF chief executive officer Shahril Ridza Ridzuan was quoted saying in the statement issued Tuesday.
The weaker equity returns was despite a net inflow of RM5.6 billion of new funds into the pension fund which holds the savings of every employed Malaysian. The EPF said that at the end of March, its total assets stood at RM536.55 billion, up 9.86% over same period in 2012.
On a sectoral breakdown, the only significantly higher returns for 1Q13 were generated from real estate and infrastructure investments, which posted over threefold gain to RM227.19 million versus RM74.34 million in same period a year ago.
Besides equities, EPF also achieved smaller gains from loans and bonds and money market instruments.
EPF, which is Malaysia’s biggest single equity investor, said it has invested more overseas in 2013 so far, up by US$1.3 billion (RM3.92 billion). At the end of 1Q13, EPF’s total overseas exposure rose to 17.55% of its total investment, but still below the Ministry of Finance allowed level of up to 23%.
“The constraints in the domestic market makes it imperative for us to find suitable investments globally that fit our long-term diversification programme, ” EPF’s Shahril said.
Looking ahead, Shahril gave a downbeat view for rest of 2013.
“In view of the unpredictable external factors such as the continued fragility of the global economy, constraints within the domestic capital market as well as the current low interest rate environment, it will not be an easy task to sustain the current level of investment performance in the quarters to come.”
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