KWAP pension fund plans to invest more in equities

KWAP's CEO, Datuk Wan Kamaruzaman, said at a press conference yesterday (pic) that the country

KUALA LUMPUR: The Retirement Fund Inc (KWAP) plans to increase its equity weight and capitalise on investment opportunities arising from the current global market weakness.

According to its chief executive officer, Datuk Wan Kamaruzaman Wan Ahmad, the country’s second-largest retirement fund has room to increase its equity allocation portfolio investments to reap the benefits of the eventual recovery in the global and domestic stock markets.

“We had been keeping a lot of cash prior to the 14th general election. Now, we are utilising our cash to take advantage of the downturn in the equities market,” Wan Kamaruzaman said.

Speaking at a press conference in conjunction with the “KWAP Inspire: Environmental Conference 2018” here yesterday, he noted that KWAP had not been significantly overweighting equities previously.

“In the fixed income space, allocations have been stable, of which together with cash, make up 50% of KWAP’s portfolio, with equities making up about 42.5%,” Wan Kamaruzaman said.

“Going forward, we still have room to increase our equity allocation, especially when you talk about the uncertainties in the global markets, as well as in the domestic market, and we have the cash to deploy. However, we will look at market timing as well,” he added.

Wan Kamaruzaman did not specify KWAP’s targeted allocation for equities or the timeline to achieve the target.

On the fund’s ongoing effort to promote environmental, social and governance (ESG) values and standards, Wan Kamaruzaman said KWAP had set aside RM800mil to be invested in international ESG initiatives through two fund managers.

To date, RM520mil had been outsourced to international ESG funds, he said.

In total, KWAP had RM3.8bil ESG funds, of which RM3.3bil comprised local ESG.

Earlier, Wan Kamaruzaman said KWAP aimed to grow its ESG portfolio to 70% from 50%-60% to strengthen its capabilities in responsible investments.

At present, KWAP is estimated to have total assets under management of RM125bil, including RM2bil of ESG-related assets.

“We have a target to reach 70% (of ESG portfolio) but it depends on the liquidity of the investments, and liquidity always depends on the ecosystem,” Wan Kamaruzaman said.

In February 2018, KWAP became be a signatory of the United Nations-supported Principles for Responsible Investment (PRI).

“Being the first pension fund in Malaysia to hold our pledge towards the PRI is in line with our efforts in ESG initiatives. It also demonstrates our commitment towards responsible investing,” Wan Kamaruzaman said.

He noted that last year, KWAP visited 27 investee companies to ask them to adopt certain practices as part of its engagement initiatives on the ESG issues.

As a PRI signatory, he said KWAP would remain committed to supporting and promoting the use of ESG investing programmes, incorporating measures to provide full transparency for investors, such as publicly reporting on investment activities in accordance with the PRI’s core principles.