KUALA LUMPUR (May 12): Malaysia’s Armed Forces Fund Board, which is eyeing its first international public equity exposure, hopes to more than double its fixed income or bond investments to 20% of total assets as the fund aims to raise its annual dividend payout to 5% for members, according to chief executive Datuk Nazim Rahman.

The Armed Forces Fund Board, also known as Lembaga Tabung Angkatan Tentera (LTAT), was established in 1972 as a statutory body that provides retirement savings and benefits for officers and members of the Malaysian Armed Forces. As of Dec 31, 2021, LTAT had assets under management of close to RM9.7 billion.

“We are starting to get exposure to the international equity market by the third or fourth quarter this year (2022). We will do that through external fund managers as well apart from having some of the funds managed internally.

“Besides [exposure to the international equity market], we are also increasing our exposure in fixed income, from the current [allocation at] about 8% to about 20%. The management of the fund [for fixed income investments] will also be done through both internal and external fund managers,” Nazim said.

Nazim was speaking during the MIDF Conversations event which was held virtually on Thursday (May 12).

MIDF group managing director Datuk Charon Mokhzani was the moderator for the event.

Nazim said LTAT hopes to achieve and sustain its proposed annual 5% dividend payout from 2022 onwards by diversifying its investments.

Looking back, he said LTAT declared a 4.1% dividend for members in 2021 after paying 3.5% in 2020, 2.5% in 2019 and 2% in 2018.

“So, what we will see over the next five years is LTAT achieving its objective of the strategic asset allocation framework, the right mix of assets within its portfolio that covers all the asset classes.

“This will translate into providing that stable and sustainable return. We will start at 5% (by the end of 2022) and that will be the figure that we hope to achieve over the long term,” Nazim said.

As at March 31, 2022, LTAT’s strategic asset allocation comprises a 44.1% portion for public equities, followed by real estate at 27.3%, according to him.

He said LTAT’s strategic asset allocation included portions for private equity at 13.3% and fixed income at 8.4% while the money market and cash segment and strategic investments made up 4% and 2.8% respectively.

On LTAT's environmental, social and governance (ESG) framework, Nazim said LTAT’s priority is on the governance side. 

“We are putting in place the new policies and guidelines for internal practices relating to investment, finance risk management [and] human capital to ensure the due processes are adhered to,” he said.

Nazim said LTAT has set up an integrity department, with an integrity committee in place at the board level, to work closely with the Malaysian Anti-Corruption Commission (MACC).