Malaysia’s EPF posts 36% rise in Q2 investment income

The contribution of real estate and infrastructure to EPF's total investment income for the second quarter of 2017 was 6.23%.

Malaysia’s Employees Provident Fund has reported a 36.36 percent increase in quarterly investment income, with a significant contribution coming from its foreign holdings in assets including real estate and infrastructure.

According to an official statement, EPF’s investment income for the second quarter ending June 30, 2017 totalled RM 11.51 billion ($2.7 billion; €2.3 billion), up from RM 8.44 billion during the same period last year. Overseas investments across all asset classes, which accounted for 29 percent of EPF’s total investment assets, contributed 32.50 percent to the income generated in the second quarter.

Real estate and infrastructure investments, clubbed under one category, contributed 6.23 percent to the total investment income. Meanwhile income from equities was the highest at 53.72 percent, followed by fixed income instruments at 37.29 percent.

“Market conditions have improved from a year ago, and all asset classes in our portfolio have recorded healthy year-on-year growth,” commented Datuk Shahril Ridza Ridzuan, EPF’s chief executive officer.

“Our foreign investments have proved to be a significant revenue driver in recent years, despite making up less than 30 per cent of total investment portfolio as at Q2 2017,”
added Shahril. “The increase in global asset values mitigated the negative effect from the strengthening of the ringgit, providing opportunities for us to realise profit.”

Among the assets liquidated by EPF this year was 11/12 St James’s Square, an 80,000 square feet building in London. The asset was sold to the Hong Kong-listed company Chinese Estates in May for £175 million. According to property services firm Savills, which acted on behalf of EPF, the deal reflected a net initial yield of 4.45 percent.

As of end 2016, 4.03 percent of EPF’s portfolio was invested in real estate and infrastructure assets. As per the revised guidelines introduced under the Strategic Asset Allocation, which came into effect at the beginning of 2017 and will continue until 2019, the target allocation for the sector has been increased to 10 percent.