Bank Muamalat Malaysia Bhd chief economist Afzanizam Rashid said it also shows that government-linked investment companies such as KWAP can contribute positively to the nation’s economy.
“The government has demonstrated its resolve to reform the economy, especially in areas relating to fiscal policy.
“As a result, local companies, be they public listed entities or private firms, have benefitted from the resilience of the Malaysian economy,” he told FMT.
Malaysia’s economic outlook received a boost recently when US bond credit rating agency Moody’s Ratings stated that it expected the country’s economic resilience to improve, thanks to the support of “diverse drivers of growth” and the country’s participation in global value chains.
Moody’s has given Malaysia’s sovereign credit an “A3” rating with a “stable” outlook. It said this highlighted the country’s determination to sustain economic growth amid challenging global conditions and uncertainties.
On Feb 13, KWAP announced that it achieved its highest-ever investment income of RM18 billion last year, with an overall return of 12%.
In its unaudited results for the financial year ended Dec 31, 2024, KWAP stated that its fund size grew by RM15.8 billion to RM185.6 billion. This, it said, was a 9.3% increase from RM169.8 billion in 2023.
The fund’s asset allocation strategy remains diversified and resilient, with 74.6% of its portfolio invested domestically and 25.4% internationally.
As of Dec 31 last year, portfolio allocations were 51.7% for equity, 32.4% for fixed income, 5.4% for private equity, and 5.2% for real estate and infrastructure. The remaining 2.2% in cash management is reserved for liquidity purposes.
Diverse portfolio reduces risk
Afzanizam said diversifying the portfolio to include various asset classes and geographical locations would minimise the risk of losses.
“Each asset class will have its own risk-return trade-off, and this is where someone competent is required to manage the funds.
“It is highly institutionalised and involves the understanding of markets, policies and behaviour, which can be translated into a portfolio investment strategy,” he said.
Economist Geoffrey Williams said that following “some difficult years in the past”, KWAP is evolving to become a better fund manager.
He suggested that KWAP focus more on high-return investments, even if it means investing in more international stocks, as they are crucial for maintaining strong overall returns.
“The aim must be to maximise returns to cover civil service pensions and reduce reliance on government spending,” Williams added.