Malaysia’s Employees Provident Fund (EPF) assets hit 1 trillion ringgit (US$246.55 billion) for the first time in early December as the country’s largest pension fund earned record gross investment income last year, driven by equities.
EPF Chairman Ahmad Badri said the rollout of vaccines for Covid-19, the disease caused by the coronavirus, will have “important bearings” for the 2021 outlook.
The pension fund earned 60.98 billion ringgit of gross investment income in 2020, up 21.26% from 50.29 billion ringgit in 2019.
Ahmad Badri said over the weekend that investment assets hit the one trillion ringgit mark on December 3 but dropped to 998 billion ringgit as of end-2020, 7.9% higher than the end-2019 level.
The “strong performance was due to the prudent approach guided by the fund’s overall strategic asset allocation, and equities remain the main driver of returns while fixed income provides stability”, he said at a statement on February 27.
Some 42% of the EPF’s assets were invested in stocks last year and accounted for 47% of gross investment income. Bonds, which represented 46% of assets, brought 42% of income.
Of the balance, the 5% of assets invested in real estate and infrastructure contributed 9% to income, and the 7% invested in money markets contributed 2%.
Foreign assets were also a key contributor.
“The contribution from the overseas assets was also critical to our performance,” Ahmad Badri said. One-third of the EPF’s assets were invested outside of Malaysia last year.
Ahmad Badri said the rollout of vaccines will have “important bearings on the outlook for the year, as we are also cognisant of new strains of Covid-19 that are easily transmitted”.
“However, we believe that the situation is being well managed…The EPF will remain focused on our mandate to help members have enough savings for sustainable retirement,” he added.
Malaysia kicked off Covid-19 vaccinations on February 21.
The EPF declared a dividend of 5.2% for 2020, down from 5.45% in 2019, and the lowest since the 4.5% payout in 2008 during the global financial crisis.
The fund, which manages retirement savings for the private sector and the self-employed, had 14.89 million members as of end-2020.