Kumpulan Wang Persaraan (KWAP), the second biggest retirement fund in Malaysia, plans to diversify its investments this year to generate higher returns from its assets collectively valued at RM129.9 billion, reported the New Straits Times.
In line with this, it intends to acquire properties in new European markets, invest in the US equity market and vary its existing asset classes, according to its CEO Datuk Wan Kamaruzaman Wan Ahmad.
For 2017, KWAP targets to generate returns of 5.5 percent versus the 5.33 percent unaudited result last year, he said.
“We want returns of more than five per cent… Only overseas investments can help. And especially with the weak ringgit, returns from overseas investments, especially properties and equity, will be better.”
KWAP, which pays the monthly pensions of around 650,000 former civil servants, currently invests 84 percent of its assets in Malaysia, while the remaining 11.6 percent is abroad.
But by 2020, it hopes to raise the latter’s proportion to 19 percent, as foreign investments provided the highest returns at 15 percent in 2016.
“Last year, we sold a building in London that we bought four years earlier. We bought it for £215 million and sold it for £275 million. Minus cost, we pocketed about £60 million,” noted Wan Kamaruzaman.
Despite the government’s restriction on capital outflows over the past two years, he said KWAP can still increase its offshore investments on a case-by-case basis and by tapping its existing overseas assets.
“For instance, we bought a property [in Australia] for AUD$200 million, now we can take a loan equivalent to 70 to 80 percent of the property’s value, and we get about AUD$140 million to be invested in anywhere we want. So, we are using loans and increasing our investments overseas, as well as using our existing assets that does not involve foreign exchange (forex).”
Locally, KWAP is looking to invest in retirement homes. It also plans to team up with established property players to develop two parcels of prime land in Kuala Lumpur at Jalan Stonor and Jalan Changkat Kia Peng.
Image sourced from The Sun Daily
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email email@example.com