KUALA LUMPUR (March 13): Lembaga Tabung Angkatan Tentera (LTAT) is eyeing the technology sector for its first international equity exposure to diversify its portfolio and boost returns.
LTAT chief investment officer Muhammad Fitri Othman said the pension fund for the Malaysian Armed Forces is expanding its strategic asset allocation (SAA) in public equities to 50%, with 30% in the domestic market and the remaining 20% in the international market.
As at Dec 31, 2022, 41% of LTAT's assets are in public equities — occupying the largest of its SAA — and all of it domestic.
LTAT is currently waiting for approval from Bank Negara Malaysia for its international investment initiative, Fitri told a press conference here on Monday (March 13), following LTAT’s dividend announcement.
The latest update about expanding its investments overseas came after LTAT chief executive officer Datuk Ahmad Nazim Abd Rahman said in May last year that the pension fund would seek exposure to the international equity market by the third or fourth quarter of 2022.
When asked whether LTAT sees any risk in investing in the tech sector now, given the difficult market environment, LTAT chief financial officer Mohammad Ashraf Md Radzi said: "The technology sector has performed very poorly over the past year, but the US and European markets have a completely different behavioural profile. You cannot compare domestic and international [markets]."
With the increase of allocation to public equities, Nazim said LTAT plans to reduce its SAA to private equity to 10% (2022: 13%), real estate to 10% (2022: 21%) and money market and cash to 5% (2022: 10%). LTAT will also grow its fixed income to 20% (2022: 13%) and its investments in defence-related businesses to 5% (2022: 2%).
LTAT, which provides retirement savings and benefits for officers and members of the Malaysian Armed Forces, had assets under management (AUM) of RM10.33 billion as at Dec 31, 2022, up from RM9.77 billion as at end-December the prior year.
Nazim said LTAT wants to further grow its AUM and boost its solvency ratio beyond 100%, which will drive LTAT's investment strategies for the next three years.