KUALA LUMPUR: The Armed Forces Fund Board (LTAT) plans to gradually expand its investment footprint overseas as part of efforts to enhance portfolio returns, with a small deployment expected as early as this year.
LTAT chief executive Mohammad Ashraf Md Radzi said the fund targets to allocate up to 20% of its overall portfolio to overseas investments under its strategic asset allocation, although the initial step would involve a relatively small deployment.
For a start, LTAT plans to work with external fund managers to manage its overseas investments to ensure a cautious and structured approach.
“Any deployment abroad would be carefully structured and assessed, particularly in light of prevailing geopolitical uncertainties that could affect global market fundamentals. Naturally, we have a few foreign markets that offer much better returns. But in the current scenario, there is geopolitical uncertainty. So, that will shift market fundamentals. So, we just need to tread carefully,“ Mohammad Ashraf told Bernama.
Sectors such as technology are among the segments LTAT is looking to tap into as part of its overseas investment strategy.
On the timeline, Mohammad Ashraf said the fund hopes to begin the process if it obtains the necessary approvals from regulators, including Bank Negara Malaysia and the Ministry of Finance. “We will continue discussions with the regulators while also monitoring market conditions.”
The domestic investments remain viable, he said, although the returns available in the Malaysian market, with a benchmark performance of about 6.6%, present challenges for LTAT in achieving its targeted minimum dividend payout of 5%.
He noted that LTAT maintains a disciplined cost structure, with expenditure capped at about 1% of assets under management, resulting in a blended return on investmenttarget of around 6%.
Mohammad Ashraf said LTAT is open to artificial intelligence (AI) or technology-based segments if they offer attractive returns with manageable risks. “So naturally, if AI or tech-based segments offer decent returns, with comfortable probabilities, then we will definitely consider.”
He said LTAT continues to monitor global market risks, including potential triggers for a financial crisis, and that the fund’s risk management framework remains critical in navigating market volatility, ensuring the sustainability of dividend payments for contributors through the buildup of reserves.
