Malaysia's 681.7 billion ringgit ($168.5 billion) Employees Provident Fund, Kuala Lumpur, reported Tuesday that investment income for the quarter ended March 31 dropped 36% from quarter ended March 31, 2015, reflecting weak equity market conditions globally and a stronger local currency that weighed on the value of the fund's overseas holdings.
That value of the total EPF portfolio was down 0.4% from three months earlier, but up 2.7% from a year earlier.
Shahril Ridza Ridzuan, CEO of the fund, said in a news release that the investment climate for the latest quarter had deteriorated from the year before, when better returns on the fund's global investments, “particularly in developed equity markets,” compensated for a weak local market.
With the ringgit strengthening 10% over the quarter, the EPF's overseas assets — accounting for roughly a quarter of the overall portfolio — saw their contribution to the quarter's investment income of 6.78 billion ringgit plunge to 22% from 47% for the year-earlier quarter, Mr. Shahril said.
Domestic and foreign equities accounted for 41.4% of overall assets but contributed only 37.6%, or 2.55 billion ringgit, of overall investment income. For the first quarter of 2015, equities had accounted for 60% of a 10.6 billion ringgit investment income pie.
The value of the fund's equity holdings, meanwhile, dropped to 282.41 billion ringgit, down 5.8% from the prior quarter while slipping 0.8% from the year-earlier quarter.
Fixed income, composed of Malaysian government securities, loans and bonds, accounted for 51.7% of the portfolio, and 55.2% of the quarter's investment income, or 3.74 billion ringgit. Money market funds amounted to 22.6 billion ringgit, and contributed 110 million ringgit in income.
The fund's investments in real estate and infrastructure came to 3.5% of the portfolio, and contributed 5.6% to income for the latest quarter. Mr. Shahril said the EPF will look for opportunities to add allocations to those market segments, with the ultimate goal of boosting their weight in the portfolio to 10% within five to seven years.