Malaysia’s Armed Forces Fund Board, known locally by its Malay language acronym LTAT, may include global assets and allocations to bonds and other tradeable fixed income securities in its new strategic asset allocation framework.
LTAT Chairman Mohd Zahidi Zainuddin provided the update when the fund reported this week that its net profit plunged almost 60% to 91.7 million ringgit (US$21.10 million) last year from 221 million ringgit in 2018.
He says the asset allocation framework, which will set long-term direction and targets for the fund to have a more diversified investment portfolio, is almost complete.
“LTAT is looking into a potential rebalancing of its portfolio to introduce allocation in tradeable fixed income instruments. The fund is also exploring the potential of having exposure in global markets,” Mr. Mohd Zahidi says in a statement on May 18.
He says this is part of the first phase of the LTAT’s “transformation journey” to strengthen its investment structure by balancing the ability to deliver “short-term wins while ensuring long-term sustainability”.
He says the fund is already making ongoing improvements, including to its investment policies and processes and risk management practices, to bolster the portfolio and the overall organisation.
Mr. Mohd Zahidi describes 2019 as a “difficult” year for the fund amid a “challenging” investment environment.
He says the sharp decline in profit was mainly because of zero dividends from Boustead Holdings, a conglomerate with businesses in plantations, real estate, pharmaceuticals, and heavy industries.
LTAT has a 59.45% stake in the company, whose net loss more than doubled to 1.28 billion ringgit in 2019 from 554.3 million ringgit in 2018.
LTAT, which manages the retirement savings of Armed Forces personnel, had 9.48 billion ringgit of assets under management in 2019.