The retirement savings fund today reported an investment income of RM6.78 billion for its fiscal first quarter (Q1 2016), which ended March 31.

This is a year-on-year decline of 36.21% compared to RM10.63 billion in Q1 2015.

“The uncertainties in the world economy, following prolonged slower growth in major economies and the high volatility in equity markets and commodity prices, are expected to remain throughout the year,” said Shahril in a statement today.

“It is critical for us to continue to be disciplined in our multi-asset class and diversified approach to meet our strategic objectives.”

According to Shahril, the first quarter of this year recorded declines in almost all global equity markets, including the FTSE Bursa Malaysia KLCI.

This has led to lower income contribution from EPF’s total equity portfolio.

“Accordingly, the contribution of global assets to total income decreased to about 22% compared to 47% last year due to lower capital and foreign exchange gains,” said Shahril.

The quarter saw equities, (41.43% of the EPF’s total investment assets) contribute RM2.55 billion, representing 37.56 per cent of the total income.

The income generated was 59.98% lower compared to RM6.36 billion recorded in the same corresponding period in 2015.

“The current economic condition presents some opportunities for the EPF to rebalance portfolios and simultaneously increase exposure to inflation asset classes, including real estate and infrastructure,” said Shahril.

“Our real estate exposure is relatively small at this point of time at less than 4%, but it is the fastest growing part of our business. The goal is for inflation-linked assets to reach about 10% of the total fund size in five to seven years.”

The EPF, Shahril said, has always been focusing on sustainable long-term returns by targeting a 2% real dividend over a three-year rolling period.