PETALING JAYA: The Employees Provident Fund (EPF) recorded total distributable income of RM19.20 billion for the first quarter ended March 31, 2024 (Q1’24), an increase of 33.1% from the RM14.42 billion recorded in the corresponding quarter in 2023.
The distributable income does not include mark-to-market gains of securities that have not been realised.
EPF CEO Ahmad Zulqarnain Onn said, “The performance of global markets in the first quarter of 2024 was marked by resilient global growth, notably in advanced economies. The FBM KLCI has increased by 10% year-to-date, reflecting increased confidence in the growth and impact of various new economic and industry policies. Internationally, the US economy continued to grow, lowering expectation for Fed rate cuts during the year, and major stock indices showcased strong rallies during the first quarter, led by a run-up in financial, healthcare, and technology stocks.”
He added that while the first quarter results have been strong, financial markets remain subject to a number of risks that have been prevalent, namely “high for longer” interest rates, geopolitical and conflict risks, and changes in policies resulting from a large number of elections being held in a number of large economies this year.
During the quarter under review, income from equities increased to RM13.15 billion, compared to RM8.69 billion recorded in Q1’23. The asset class remained the top income contributor at 68% of total distributable income. The increase in income is attributed to the fund managers’ proactive strategy in realising capital gains during the market rally, taking advantage of the favourable conditions before the uncertain environment anticipated in the coming quarters.
Fixed Income instruments continue to be the anchor for EPF, providing a steady stream of income and mitigating the impact from short-term market volatility. This asset class, predominantly Malaysian Government Securities, contributed 27% or RM5.14 billion to the total distributable income for Q1’24.
Real estate and infrastructure registered an income of RM0.22 billion in Q1’24, while money market instruments generated RM0.69 billion, in line with the return expectations set for these asset classes.
EPF’s overall investment assets as at March 2024 grew to RM1.19 trillion, of which overseas investments account for 38% of the total assets. The pension fund’s overseas investments, which were mainly in equities, continued to outperform and add value to its overall return as they generated RM9.88 billion in income, representing 51% of the total distributable income.
Meanwhile, EPF’s domestic investments account for 62% of total assets and mainly invested in fixed Income instruments, continued to provide long-term income stability through interests and profits.
A total of RM16.56 billion out of the RM19.2 billion total distributable income was generated for conventional accounts and RM2.64 billion for syariah accounts.
Ahmad Zulqarnain said EPF is keeping an optimistic outlook for the domestic economy, which started 2024 on a firm footing, recording an acceleration in growth to 4.2% in Q1’24.
The quarter under review also witnessed EPF maintaining an active-to-inactive member ratio of 53:47 in Q1’24, consistent with the same period in the previous year, with 8.6 million active members from a total membership of 16.1 million.
