PETALING JAYA: Outperforming overseas investments, mainly foreign stocks, remained the biggest contributor to the Employees Provident Fund (EPF) as it generated RM9.88bil in income for the first quarter of 2024 (1Q24).
Despite accounting for only 38% of EPF’s overall investment assets of RM1.19 trillion, the overseas investments delivered 51% of the provident fund’s total distribution income in 1Q24.
The balance 49% of the distribution income was contributed by EPF’s domestic investments that represented 62% of the total assets.
In total, EPF recorded a distributable income of RM19.2bil in 1Q24, which surged by 33.1% year-on-year (y-o-y). It is noteworthy that first-quarters results have typically been strong for the EPF.
A total of RM16.56bil out of the RM19.2bil total distributable income was generated for conventional savings, and RM2.64bil for syariah savings.
The 1Q24 distributable income did not include mark-to-market gains of securities that have not been realised.
EPF chief executive officer Ahmad Zulqarnain Onn said the performance of global markets in 1Q24 was marked by resilient global growth, notably in advanced economies.
“The FBM KLCI index 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 expectations for Federal Reserve 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.
“While 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,” he said in a statement yesterday.
In 1Q24, EPF’s income from equities increased to RM13.15bil, compared with RM8.69bil in the previous year’s corresponding quarter.
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 continued to be the anchor for the 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 RM5.14bil to the 1Q24 total distributable income.
Real estate and infrastructure registered an income of RM200mil in 1Q24, while money market instruments generated RM690mil, in line with the return expectations set for these asset classes.
EPF said it remains dedicated to supporting and contributing to the growth of Malaysia’s economy, by continuing to allocate more than 80% of its new investment annual allocation to the domestic market.
Financial performance aside, EPF saw 107,105 new member registrations by March 2024, bringing the total membership to 16.1 million.
Out of that number, 8.6 million were active members, which represent 50% of the country’s 17.1 million labour force.
Active members refer to members who contributed at least once in the last 12 months.
Meanwhile, new employer registrations also showed strong growth of 20,080 during the period, bringing the total number of employers registered with the EPF to 608,433.
Total contributions received increased from RM25.83bil in 1Q23 to RM29.13bil in 1Q24.
The latest first quarter also witnessed the EPF maintaining an active-to-inactive member ratio of 53:47, consistent with the same period in 2023.
The EPF continues to expand its i-Saraan coverage, enabling workers in the informal sector or without formal income to save for retirement.
Throughout 1Q24, i-Saraan recorded new registrations of 146,171, boosting its total i-Saraan membership by 43.9% y-o-y to 1.4 million.
“The increase in the number of Malaysians opting to save with the EPF, as well as current members making voluntary contributions, signifies the continued economic growth momentum of the country elevated by sound Malaysia Madani policies,” said Ahmad Zulqarnain.
The provident fund 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 1Q24.
The Malaysian economy will be supported by continued strength in domestic demand and a recovery in exports.
The outlook for global growth this year has also become more positive.
However, risks remain high due to uncertainty surrounding the impact of monetary policy tightening on growth and financial market stability, China’s property market crisis, as well as geopolitical tensions that could push commodity prices higher and threaten global economic growth.
Looking ahead, EPF said it will continue to implement robust risk management strategies to identify and mitigate risks associated with international trade and geopolitical developments.
“The EPF will also closely monitor the potential outcome of the US presidential election, which is expected to influence global market movements and sentiment,” it said.
