Malaysian pension fund seeks to increase foreign investment during global sell-off

Malaysia’s state pension fund aims to increase its overseas investments as it views this year’s turmoil in financial markets as a buying opportunity.

The Kumpulan Wang Persaraan (Diperbadankan), or KWAP, plans to increase the proportion of foreign investment in its portfolio to 30% by 2025 from 20% currently, CEO Nik Amlizan Mohamed said in an interview with Bloomberg TV on Tuesday. . The civil servants’ pension fund held 159 billion ringgit ($35 billion) in assets at the end of 2021.

“We have to accept the volatility and view the current weakness as an opportunity for us to enter new investments at attractive valuations,” she said. “We are, after all, in the business of taking measured and calculated risks.”

Stocks and bonds have been rattled this year, as soaring inflation forced global central banks to tighten at a time when slowing economic growth was already weighing on the outlook for risk assets. KWAP aims to double the share of its investments in the private market, which includes real estate and infrastructure, to 20% by 2025, amid increased volatility seen in public markets.

“If we compare volatility versus expected return, our intention is to further diversify into the private market, locally and globally,” said Nik Amlizan.

Plans to increase overseas and private market investment aim to help KWAP achieve its goal of increasing its annual return to 7% in three years, after hitting 6% annually for the past decade. , she said. Obtaining returns in today’s world of higher interest rates is going to be difficult.

“The low interest rate environment that existed for a decade is gone,” she said. “We need to adjust the assumptions we used in our models to accommodate the ‘new normal’ – and be nimble.”

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