This article first appeared in The Edge Malaysia Weekly on June 1, 2026 - June 7, 2026

THE Employees Provident Fund (EPF) reported an impressive 51% year-on-year jump in total investment income to RM27.73 billion for the first quarter ended March 31, 2026 (1Q2026) — the total opposite of the headline 13% y-o-y drop in 1Q2025 income that saw it take a lot of flak in parliament last June. The 13% decline was on the back of weaker global equity markets and not related to the EPF selling foreign assets and raising domestic investments, the Ministry of Finance explained at the time.

Yet the EPF’s headline record-high 1Q2026 showing may well have scant meaning since the RM27.73 billion “includes [an undisclosed amount of] unrealised mark-to-market gains and losses on securities”, arising “mainly from foreign exchange rates and fluctuations” as disclosed by the retirement fund in its May 19 statement.

The EPF’s 18.3 million members will only receive annual dividends declared on realised profits, not paper gains. It is not immediately known how the strengthening of the ringgit against the US dollar and several key currencies between December and February this year, ahead of the Iran war that broke on Feb 28, had affected the EPF’s portfolio performance in 1Q2026.

What is clear is that the proportion of the EPF’s foreign assets against its total assets are at a three-year low — making up only 36% of its total investment assets as at end-March 2026, down from 38.3% as at end-December 2025 and as high as 39% between April and September last year.

While the EPF does not disclose the absolute value of its foreign assets, it is likely that its portfolio managers had taken profit on foreign equities, and the overall value of its overseas portfolio had come down quarter on quarter in absolute terms for the first time since 2Q2022, our back-of-the-envelope calculations show.

Foreign assets contributed RM15.36 billion or 55% to total investment income in 1Q2026, a new record high, beating RM13.33 billion in 3Q2025 and RM12.92 billion in 2Q2025. It is not immediately known what portion is mere paper gains as this was not disclosed by the EPF.

Equities contributed 73.4% or RM20.34 billion to the phenomenal headline 1Q2026 investment income, beating the previous high of RM18.32 billion in 3Q2024 (93% of total investment income due to losses in its money markets as well as real estate and infrastructure segment) and RM16.95 billion in 3Q2025 (68% of total investment income).

The 88% y-o-y increase in equities income to RM20.34 billion in 1Q2026 from RM10.8 billion in 1Q2025, “was driven by broad-based market gains in the early part of the quarter, as improving investor sentiment lifted most major indices,” the EPF said in the May 19 statement.

“However, this momentum eased in March [2026] as escalating geopolitical tensions and global uncertainty triggered heightened market volatility,” the EPF added.

Traditionally, strong contribution from foreign assets and equities points to strong income haul for the year and, in turn, good dividends.

It is worth noting that fixed income assets are once again the EPF’s largest asset class by value, making up 46.1% of total investment assets of RM1.44 trillion in 1Q2026 — up from 44.7% in 4Q2025 and 45% in 3Q2025 when equities made up a larger portion of the EPF’s investment assets at 46.1% in 4Q2025 and 46% in 3Q2025, respectively.

According to the EPF, fixed income instruments contributed RM6.76 billion or 24% to total investment income in 1Q2026 — comparable to the previous two quarters, even though this contribution as a percentage of overall income is lower in 1Q2026 due to outsized equities income.

The Edge withholds its dividend prediction for the full year, even though the EPF looks to be on track to deliver at least 5% dividend for 2026. The EPF usually releases its second-quarter performance report between mid-August and late-September.

For its part, EPF CEO Ahmad Zulqarnain Onn said the “strong first-quarter income reflects a portfolio decision taken at the beginning of this year to realise gains ahead of anticipated market turbulence”.

“Our portfolio managers front-loaded income that would otherwise have been spread across the full year. Members should not extrapolate this quarter’s result as it is unlikely to be repeated in subsequent quarters,” he said in a statement, giving the assurance that the underlying portfolio continues to be managed for sustainable, long-term returns and not short-term peaks.

“The environment ahead remains challenging. Elevated geopolitical risk, rising oil prices and renewed inflationary pressures create real headwinds for global markets. We entered this period of uncertainty in a position of strength because we acted early. Our priority now is capital preservation and disciplined deployment to ensure the adequacy and sustainability of retirement savings for our 18 million members over the long term,” Ahmad Zulqarnain added in his statement.

Of the headline total investment income of RM27.73 billion for 1Q2026, RM22.63 billion was for Conventional Savings (SK) and RM5.1 billion for Shariah Savings (SS).

The EPF declared a record high dividend payout of RM79.6 billion (RM67.1 billion SK and RM12.5 billion SS) for 2025 but its dividend rate of 6.15% was lower compared to 6.3% in 2024 when the total dividend payout was RM73.24 billion (RM63.05 billion SK and RM10.19 billion SS).

Since the turn of the millennium, the EPF’s highest dividend rate has been 6.9% in 2017 for SK and 6.4% for SS but the total payout at the time was only RM48.13 billion.

Strong dividends continue to encourage voluntary contributions. Voluntary contributions made up RM8.83 billion or 23.23% of RM38.01 billion total gross contributions received by the EPF in 1Q2026. Some 232,305 Malaysians in the formal sector contributed above the statutory contribution rate of 11% as at end-March 2026.

Of the EPF’s 18.3 million members as at end-March this year, 10.81 million were active members. That is significantly higher than 16.3 million total members and 8.88 million active members in 1Q2025 given that from October 2025, Malaysia implemented mandatory EPF contributions of 2% each for non-Malaysian employees (except domestic helpers) holding valid work passes and their employers. 

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