KUALA LUMPUR: Khazanah Nasional Bhd is adopting a total portfolio approach (TPA) alongside its existing asset allocation framework to better manage risks and exposures as the global risk landscape evolves.
Its managing director Datuk Amirul Feisal Wan Zahir said the approach would allow the sovereign fund to look beyond individual asset classes and better understand where its risks and exposures were concentrated.
“TPA cuts across asset-class labels, giving us a better view of the underlying exposures affecting our portfolio, rather than simply following where the market leads,” he said in his opening address at the Khazanah Megatrends Forum (KMF) 2026 yesterday.
TPA looks at the portfolio as a whole, rather than treating each asset class separately, to assess how different investments and risks interact with one another.
This differs from the traditional strategic asset allocation approach, where investment decisions are guided by set allocations across asset classes.
Amirul Feisal said this was part of a broader shift in how Khazanah approached resilience, with the sovereign fund seeking not only to absorb external shocks but also to build greater “agency” to counterbalance them.
“For the past two years, one of our core messages at KMF was to be resilient. Resilience absorbs shocks. This year, I would go one step further: build an agency to counterbalance the shocks, so no single source of power decides our fate,” he said.
Amirul Feisal said the forum’s theme, Who’s Got the Power? Watching the Watchmen in an Imbalanced World, was deliberately broad, with power taking different forms across the global economy.
He said many of the megatrends affecting Khazanah as an investment house – including inequality, climate change, shifting demographics and artificial intelligence (AI) – were, at their core, contests for power, as countries and companies sought greater control over resources, technology and markets.
“In response, the world is pouring capital into three main sectors: energy, technology and security, each a smaller contest calling for its own counterbalance,” he said.
On energy, Amirul Feisal said the Strait of Hormuz had highlighted the leverage that could come from controlling a key supply route, while higher energy prices were adding to inflationary pressures and making capital more expensive.
Technology was the second contest, with global markets reaching record highs amid nearly US$770bil in bets on AI-related capital expenditure, while profits were becoming increasingly concentrated among a small number of companies.
He also cited a widely referred-to study by the Massachusetts Institute of Technology, which found that 95% of enterprise AI pilots had yet to show measurable returns, raising questions over how long the exuberance in financial markets could last.
“All more so when the party is loudest in a country whose debt has now hit more than US$40 trillion, or approximately 126% of gross domestic product (GDP),” he said.
For Malaysia, which is attracting a growing share of the AI and data centre build-out, the question was whether the country would merely provide the land, water and electricity, or also capture a share of the value created, he said.
The third area was security, with countries paying a premium to reduce their dependence on others across defence, food supply chains and labour.
“Whoever controls the critical inputs – through decade-long industrial policies, pure geographical luck (or even both) – holds enormous leverage,” Amirul Feisal said.
Underpinning all three contests was another struggle – the competition for capital itself, he said.
Amirul Feisal pointed to the growing influence of passive investment, where money automatically flows into markets based on the composition of major stock indexes.
“With a weightage of almost two-thirds of the MSCI All Country World Index, the United States automatically attracts the bulk of passive flows, even if it contributes only about a quarter of global GDP,” he said.
Still, Amirul Feisal said the concentration of capital in financial markets had not necessarily translated into broader gains for the real economy.
“Even as corporate profits and productivity climb, labour’s share of national income keeps slipping, and consumption itself has grown more concentrated among higher-income households: the so-called “K-shaped” economy,” he said.
Amirul Feisal said larger economies such as the United States, Europe and China could draw on large domestic markets and deep pools of public capital, giving them a greater cushion against external shocks.
Malaysia, however, did not have the same cushion and needed to build resilience through greater diversification, he said.
The two-day KMF, now in its 21st edition, brought together close to 1,500 delegates to discuss the shifting distribution of power across the global economy and its implications for investors, businesses and policymakers.
