KUALA LUMPUR: The Employees Provident Fund's (EPF) investment income jumped 20 per cent to RM57.57 billion for the nine months ended Sept 30 2024 from RM47.86 billion in the same period in 2023.
For the third quarter (Q3 2024), the EPF's investment income was RM19.67 billion, up from RM14.67 billion a year ago.
EPF chief executive officer Ahmad Zulqarnain Onn said the robust performance reflects its investment strategy of maintaining a highly diversified portfolio across major asset classes.
Malaysia's economy grew by a solid 5.9 per cent year-on-year in Q2, while the FBM KLCI closed at 1,648 at the end of Q3, returning 13 per cent year-to-date.
As of September 2024, the EPF's investment assets totalled RM1.22 trillion with 62.2 per cent and 37.8 per cent allocated to Malaysian and international investments.
In the Q3 2024, international investments contributed RM10.50 billion, accounting for 53 per cent of total investment income.
Of the total investment income, RM48.02 billion was generated for Simpanan Konvensional, and RM9.55 billion for Simpanan Shariah.
During the first three quarters of 2024, the EPF saw 364,364 new member registrations, bringing total membership to 16.1 million.
A total of 8.69 million are active members, which now represent 50.4 per cent of Malaysia's 17.24 million labour force.
New employer registration recorded during the period was 55,717, bringing the total number of active employers registered with the EPF to 612,889.
Total contributions received increased from RM23.1 billion in Q3 2023 to RM25.2 billion in Q3 2024.
EPF said investor sentiment remains positive, bolstered by the performance of Malaysian companies, economic policies, and fiscal reforms.
"Global markets were generally positive during the quarter, driven by the start of the interest rate easing cycle as the US Federal Reserve reduced interest rates by 50 basis points in September.
"The highly anticipated reduction in the US interest rates drove market sentiment and gains across multiple sectors, including REITs, utilities and financials, all of which positively impacted the EPF's investment portfolio."
Nonetheless, the fund said risks remain in the global outlook such as the trajectory and pace of interest rate reductions, persistent and escalating geopolitical tensions particularly in the Middle East, and potential higher import tariffs into the US with the election of Donald Trump last week," he added.
Equity investments continued to be a substantial income contributor for EPF in Q3 2024, generating RM18.32 billion.
The increase, compared to RM9.17 billion in Q3 2023, reflects EPF's proactive approach in realising gains amidst market volatility, alongside the positive momentum in equity markets.
Fixed Income, which plays a crucial role in capital preservation, has been the anchor for the EPF by providing a steady income stream and mitigating the impact of short-term market volatility.
This asset class, comprising Malaysian Government Securities and equivalents, as well as loans and bonds, contributed 33 per cent or RM6.51 billion, to EPF's total investment income for Q3 2024.
Real estate and infrastructure recorded a gain of RM820 million during the quarter on a constant currency basis.
As majority of real estate and infrastructure investments as well as money market instruments are denominated in non-ringgit currencies, and with the recent strengthening of the ringgit against the US dollar in Q3 2024, the asset classes experienced a loss of RM3.71 billion and RM1.45 billion respectively after foreign exchange translation.
The pension fund said these positions are temporary, reflecting current currency movements.
"International money markets are highly sensitive to short-term currency fluctuations, leading to translation losses during periods of currency appreciation.
"The EPF's investments in real estate and infrastructure have a longer-term horizon where currency movements have less impact on overall actual returns.