EPF records RM66.99bil in total investment income for 2023

SHAH ALAM: The Employees Provident Fund (EPF) recorded RM66.99bil in total investment income for the financial year ended Dec 31, 2023 – which is a 29% year-on-year increase from the RM51.91bil reported in 2022.

The total investment income was reported after netting off equity write-downs.

Of the RM66.99bil in total investment income, RM5.72bil was generated from mark-to-market (MTM) gains of securities that have not been realised and will not be part of the dividend distribution.

The retirement fund’s investment assets continued to record strong growth with RM1,135.82bil, an increase of 13% compared to RM1,002.67bil in 2022.

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The increase consisted of income from the portfolio and a healthy collection of contributions of RM97.56bil in 2023, an increase of 15% from RM84.78bil in 2022.

About 62% of the investment assets were invested domestically.

Domestic investments generated RM31.71bil, or 47% of total investment income, providing stability to the EPF’s overall total investment income.

Global assets generated income of RM35.28bil, or 53%, of the total investment income recorded.

As for asset classes, Fixed Income instruments made up 46% of investment assets, while Equities comprised 42%. Real Estate and Infrastructure as well as Money Market instruments accounted for 7% and 5% of EPF assets, respectively

Equities accounted for 58% of the EPF’s total investment income with a return of investment (ROI) of 8.68%. The asset class contributed RM39.05bil after netting off write downs.

Fixed Income instruments, which were predominantly in the form of Malaysian government securities, continued to be the anchor for the portfolio in maintaining steady returns.

The asset class contributed RM19.74bil, or 30% of the EPF’s total investment income, yielding an ROI of 4.41%. The higher income recorded compared to 2022 of RM18.15bil is in line with the growing asset size and is mainly contributed by interest and profit income from bonds and sukuk, respectively.

Real Estate and Infrastructure registered an income of RM6.03 bil-up by 8% or RM0.43 billion compared to the RM5.60bil recorded in 2022. This asset class generated a ROI of 5.04%.

Meanwhile, Money Market instruments generated an income of RM2.17bil, which more than doubled the income generated in 2022, on the back of higher money market balances and foreign currency translation. This asset class also delivered an ROI of 4.93%.

Its Asset Under Management (AUM) for 2023 as at Dec 31, 2023, stood at RM702.48bil, up from the RM643.38 bil in 2022.

Deployment into the domestic market accounted for more than 80% of the 2023 investment allocation, providing capital to Malaysian companies and the economy as a whole.

As at December 2023, the EPF holds about 28% of the outstanding Malaysian Government Securities (MGS) and Government Investment Issues (GII) issuances and about 12% of the FTSE Bursa Malaysia Top 100 Index market capitalisation.

Overall, total contributions increased by 15% in 2023 to RM97.56bil, reflecting improvements in members’ financial capacity as a result of the progressive recovery of incomes, employment, and the economy.

New employer registrations were recorded at 82,005 as at the end of 2023, bringing the total number of employers registered with the EPF to 606,187.

Commenting on the performance for 2023, EPF chairman Tan Sri Ahmad Badri Mohd Zahir said the overall market volatility in 2023 underscored the importance of the EPF’s robust investment strategy and prudent risk management.

He added that the EPF’s Strategic Asset Allocation (SAA) paired with active portfolio management enabled it to achieve the results for 2023.

On the outlook for 2024, Ahmad Badri said EPF’s resilient investment approach and unwavering focus on long-term value creation should set the path for it to continue to deliver strong performance.

“Views are still mixed on the global growth outlook. Since the pandemic, the world has had several years of uncertainty and countries have demonstrated a real sense of resilience and agility,” he said in a statement on Sunday (March 3).

While the global markets presented formidable challenges, the EPF’s resilient investment approach and unwavering focus on long-term value creation should set the path for it to continue to deliver strong performance and uphold its commitment to its members,” he added.