Malaysia’s Employees Provident Fund’s (EPF) gross investment income rose 22.73% year-on-year in the second quarter, which Chief Executive Officer Alizakri Alias attributes to a strategic asset allocation that helped it to navigate a “tumultuous” period in the wake of the coronavirus pandemic.
The pension fund’s gross investment income in April through June was 15.12 billion ringgit (US$3.68 billion), up from 12.32 billion ringgit in the second quarter of 2019. Income in the first half of 2020 rose 24.11% year-on-year to 27.28 billion ringgit.
The EPF’s strategic asset allocation “served us well during the tumultuous first half of the year” when governments imposed lockdowns and closed borders to curb the spread of the pandemic, which disrupted supply chains and caused slowdowns in many sectors and industries, Mr. Alizakri says in a statement on September 20.
He says the fund’s bond exposure helped it to ride out the initial slump early in the second quarter, and its exposure to stocks benefited when domestic and global markets improved as lockdowns were gradually eased.
In spite of the fact that restrictions to curtail the spread of Covid-19 is lessening, the EPF is maintaining a “cautious stance” because a vaccine against the disease remains a “promise that will not be fulfilled in the immediate future”, he says.
“Moving forward, it will be even more crucial for the EPF to continue investing in fundamentally strong assets, especially those companies which have shown an ability to pivot in adapting to new norms,” he adds.
The EPF, Malaysia’s largest pension fund, manages retirement savings of private sector employees and had 929.64 billion ringgit of assets under management as of end-June 2020.