KARACHI, July 25: The Employees Old-Age Benefits Institution (EOBI) has made a fabulous growth of around 24 per cent in investment income by realizing Rs9.222 billion during the outgoing fiscal 2002-03 as compared to Rs7.448 billion made a year ago, officials said on Friday.

The institute, which for the first time last year entered capital market at a full scale, made a record 41.71 per cent return on investment in equities. Total income realized on equity investment for the period from July 1, 2002, to June 30, 2003, stood at Rs358.219 million, the officials said.

The income realized out of capital gain recorded 20.75 per cent growth at Rs252.739 million, as against Rs95.283 million a year ago. Similarly income out of capital gain is estimated by the EOBI to be at Rs150 million. The dividend income during the period under review stood at Rs105 million.

Another major component of the investment income for the year ended on June 30 had been capital gain from the sale of Pakistan Investment Bonds (PIBs) that stood at Rs403.220 million as compared to a meagre amount of Rs0.040 million last year.

It is interesting to note that the EOBI on an investment of Rs35.588 billion made in different modes and tools of investments, including government securities, Certificates of Investments (COIs), Term Finance Certificates (TFCs) and equities, managed to get 26 per cent return at Rs9.222 billion.

Despite the fact that the EOBI is a government organization which has its own ‘work culture’ but during the last year some freshness in approach towards investment policy had been witnessed. There was a major shift from fixed income investment to market related investment opportunities.

As a result of this diversification of portfolios, the EOBI has not only managed to offset the negative impact of dwindling interest rates on government securities, but has also succeeded in earning better profits and improving its income, the officials said.

EOBI chairman Muhammad Shafi Malik told Dawn the institution with the advice of a leading professional investment advisory firm and approval by the investment committee of the Board of Trustees, had been following a prudent investment policy.

He said all the investment ventures undertaken by the EOBI during the year 2002-03 were well in line with the State Bank of Pakistan’s relaxed monetary policy.

The EOBI chief said under a well-defined portfolios diversification plan, the institute had been reducing its holding in government securities which presently stood at 71 per cent from around 89 per cent at the beginning of the year 2002-03.

Similarly, he said the investment in COIs, TFCs and equities had gone up to 12.72 per cent, 4.41 per cent and 11.30 per cent, respectively, as compared to the previous year’s holdings of 9.47, zero percentage and 1.46 per cent.

EOBI’s investment adviser Farooq A Awan told Dawn that in order to mitigate risk in equity investment the institution was firmly following professionally defined investment parameters.

He said the EOBI investment policy in equities was on long-term basis and it was in those stocks which had strong fundamentals, high yield and excellent track record of giving dividends.

Mr Awan said the EOBI’s current equity investment was in blue chips of those com-panies that have strong balance sheets.