EPF's Tough Start to 2025: What's Behind the Q1 Performance Drop?
EPF had a rough start to 2025 with earnings down 15%. Global markets and the weak ringgit are to blame, but is this just a temporary setback for Malaysia's biggest retirement fund?
Let’s talk about EPF’s recent numbers, because they’re not exactly encouraging. The first quarter of 2025 saw the fund’s investment income drop by 15% compared to the same period last year. That’s a significant dip, and it’s worth understanding why it happened—and what it means for the millions of Malaysians who depend on EPF for their retirement savings.
The Numbers Tell the Story
EPF reported RM12.5 billion in investment income for Q1 2025, down from RM14.7 billion in Q1 2024. That’s a noticeable decline, and it didn’t come out of nowhere. A few key factors played a role:
Global Market Volatility
- EPF has substantial investments overseas, particularly in markets like China and the US. Both have been shaky this year, with China’s economy still struggling and US stocks facing uncertainty over interest rates.
- When global markets wobble, EPF’s returns take a hit.
The Ringgit’s Struggles
- The weak ringgit has been a persistent problem. Even when EPF’s overseas investments perform well, converting those gains back into Malaysian currency eats into returns.
- This isn’t a new issue, but it’s one that keeps making things harder.
Domestic Market Slump
- Closer to home, Bursa Malaysia hasn’t been doing EPF any favors. The KLCI has been under pressure, and some of EPF’s biggest local holdings—like Maybank and Tenaga Nasional—haven’t delivered the dividends they used to.
What’s EPF Doing About It?
The fund isn’t just sitting back. It’s been making moves to adjust its strategy:
- Shifting to Safer Bets: EPF has been putting more money into fixed-income investments like bonds, which are less volatile than stocks.
- Rebalancing Overseas: While it’s pulled back from some struggling markets, it’s also looking for opportunities in others, like Southeast Asia and Europe.
- Pushing for Better Returns at Home: EPF has been vocal about the need for Malaysian companies to step up their performance. After all, if the local market doesn’t improve, neither will EPF’s returns.
What Does This Mean for Members?
The big question is whether this drop is a temporary stumble or a sign of deeper trouble. Here’s the reality:
- Dividends Might Be Lower: If the trend continues, EPF’s 2025 dividend could dip slightly from last year’s 5.5%. That’s not catastrophic, but it’s not great news either.
- Long-Term Stability Isn’t at Risk: EPF is still a massive, well-managed fund with a diversified portfolio. One bad quarter doesn’t change that.
- Members Should Stay Calm: Panicking over short-term fluctuations isn’t helpful. Retirement savings are a long game, and EPF has weathered rough patches before.
The Bottom Line
EPF’s Q1 performance is a reminder that even the biggest funds aren’t immune to global and local economic shifts. The drop isn’t ideal, but it’s also not a disaster. The key now is whether EPF’s adjustments—like its focus on fixed income and selective overseas investments—will pay off in the coming quarters.
For members, the best move is to stay informed and avoid knee-jerk reactions. EPF’s job is to navigate these challenges, and so far, it’s still one of the most reliable retirement savings systems in the region.
Johan Chairil