KUALA LUMPUR (Nikkei Markets) -- Malaysia's Kumpulan Wang Persaraan, which manages over $36 billion in assets of civil servants' retirement benefits, may invest more in listed equities and alternative assets as it reviews current investment policy, its chief executive said Monday.
The state-run pension fund, also known as KWAP, favors dividend-yielding sectors such as banking and telecommunication, Wan Kamaruzaman Ahmad told reporters. KWAP is also looking to invest more in global technology sector and remains in talks with two insurers to acquire a stake, he said.
"In view of the global outlook of the market, we will be reviewing our strategic asset allocation soon," Kamaruzaman said. "We will continue to seize new opportunities that could help us grow the fund without compromising on our risk appetite.
KWAP is a substantial shareholder in some of Malaysia's largest listed companies, including utility firm Tenaga Nasional as well as top two banks - Malayan Banking and CIMB Group Holdings. KWAP has also invested in semiconductor firm Pentamaster and U.S. ride-hailing firm Uber Technologies.
Currently, KWAP allots 46% of assets to fixed income instruments, 40% toward equities and the remainder 14% to alternative assets such as private equity and real estate. Bulk of its investments are in Malaysia and international assets accounted for 13% of its portfolio.
KWAP, which typically buys minority stakes in companies, hopes to conclude negotiations to acquire a stake in foreign-owned insurance company by end of April, Kamaruzaman said. He declined to elaborate further.
Foreign insurers, such as Prudential and Great Eastern Life Assurance Company, are mandated to sell at least 30% stake in their wholly-owned operations in Malaysia by the end of June as part of their licensing regulation.
KWAP has been seeking to boost returns abroad as Malaysia's shares lagged regional peers. The country's FTSE Bursa Malaysia KLCI rose 9.5% last year compared to Singapore's Straits Times Index's 18% gain. Indonesia's benchmark Jakarta Composite Index surged 20% in 2017.
Gross income of KWAP rose to a record of 9.03 billion ringgit ($2.32 billion) in 2017 on the back of 5.77% return-on-investment. Total fund size expanded to 140.8 billion ringgit from 125 billion ringgit a year earlier.
"We are now adopting the total return approach as our sole and primary performance metric, a more dependable method for retirement income strategies and in mitigating certain risks that are inherent to the investment portfolio, while generating consistent returns," Kamaruzaman said.