This article first appeared in The Edge Financial Daily on March 30, 2018 - April 5, 2018

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), whose assets under management (AUM) grew 4.8% to RM279.2 billion last year, intends to increase its private investment to 5% from 1.9% currently.

The country’s largest asset management company has also set its sights on investments in global assets.

Its group chairman Tan Sri Abdul Abdul Wahid Omar said PNB intends to allocate more money to private investment to reduce its cash holdings.

Still, public equity forms the bulk of its investments, accounting for about 70.5% as of Dec 31, 2017.

“We need to reduce our cash holdings further and reinvest that money in other asset classes, in particular private investment, from 1.9% currently to 5% for our first target and up to 7.5% eventually,” Abdul Wahid told the media at the launch of its inaugural public annual report 2017 yesterday.

PNB plans to rebalance its asset allocation, shifting some of its cash into fixed-income instruments, the allocation for which stood at 5.8% of its portfolio. The group’s cash holding had fallen to 18.6% in 2017, from 20.4% in 2016, according to Abdul Wahid.

In terms of investments in fixed-income instruments, PNB will increase its investment in such asset class to boost the overall portfolio yield, while supporting the domestic fixed-income market.

Meanwhile, chief executive officer Datuk Abdul Rahman Ahmad said PNB also plans to diversify into global assets.

“We are open to any interesting investment opportunities that are attractive to us and that meet our investment requirements. Naturally we tend to invest in markets that we are familiar with, where there is stability in terms of the investment laws and taxes as well.

“We like London as it has been a good market because it is an international market, so it attracts foreign investors from many countries,” he said.

For the financial year ended Dec 31, 2017 (FY17), the pro forma consolidated net income of PNB and its unit trust funds (PNB Group) increased by 16.4% to RM17.7 billion, from RM15.2 billion in FY16.

In the first two months of 2018, PNB has already recorded strong performance with its AUM and PNB Group’s pro forma consolidated net income rising by 6.1% and 39.5% year-on-year to RM279.6 billion and RM2.2 billion, respectively.

PNB distributed dividends and bonus amounting to RM14.6 billion for FY17, bringing the cumulative dividends paid out since its inception in 1981 to RM172.1 billion .

PNB has announced an income distribution of 6.75 sen per unit for Amanah Saham Bumiputera 2 (ASB2) and 6.25 sen per unit for Amanah Saham Malaysia (ASM) under its wholly-owned subsidiary Amanah Saham Nasional Bhd fixed-price funds for the financial year ending March 31, 2018 (FY18).

PNB also declared an income distribution for the three funds under the Amanah Saham Gemilang (ASG) umbrella, namely ASG-Pendidikan (4.80 sen per unit), ASG-Kesihatan (5.20 sen) per unit and ASG-Persaraan (5.15 sen per unit) for FY18.

Abdul Abdul Wahid said the performance of ASB2, ASM and ASG has benefited from the robust 5.9% gross domestic product growth and the 9.4% rise in the FBM KLCI, the first rise after three years of negative price returns.