KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will begin investing in the equity markets of several advanced and emerging markets within three years as part of its portfolio rebalancing exercise.
PNB president and chief executive officer Datuk Abdul Rahman Ahmad said it had identified six global funds managers that could be enlisted in the endeavour.
"Unfortunately I can't reveal the names of these six firms now but what I can say is that actual equity investment takes up to three years and though we can finalise everything this year, it won't be until the next three years that we can take up equity allocation,” he said at a briefing on PNB's results here today.
“We would like to make the most prudent investment with the best returns for our stakeholders and because of this, we have to take a number of things into account. Yes it does takes time but we want to be as careful as possible,” he said.
The three-year deadline will coincide with the end of PNB STRIVE-15 Strategic Plan 2017-2022.
The blueprint comprises three pillars, namely enhancing sustainable returns, effective investment management and driving operational excellence.
Chairman Tan Sri Dr Zeti Akhtar Aziz said the markets that PNB was looking at include the United States, United Kingdom, Japan, France and Germany. The emerging economies will mainly be from both Asia and Europe.
Zeti said the timing to enter these markets is crucial.
“Yes we are interested to enter these markets however we do still need to build up our expertise in a gradual manner.”
PNB is also looking at other type of instruments and market segments.
“Our strategy going forward is to diversify our portfolio both within the domestic and international market. We have been blessed to have one of the strongest bond market in Asia in terms of structure and maturity.
“Right now we have five or six per cent in the domestic bond market but we are looking at diversification into different segments such real estate investment trust (REIT). However these proposals must first be approved by PNB's investment committee," she explained.
On whether PNB had been approached to be a major investor in the government's proposed airport REIT, Abdul Rahman said: "We have not been approached to invest in it and we also have not been updated about it.”
First announced by Finance Minister Lim Guan Eng during the tabling of the 2019 Budget, the proposed airport REIT would be the first of its kind in the world with an expected yearly returns of RM700 million.
Zeti said the group's portfolio diversification was ongoing with cash position reduced to 17.4 per cent by redeploying it to fixed income.
“We are progressing well in our cash reduction as cash does not give us the returns that we want, while our international diversification is gathering pace with global assets now representing 3.3 per cent of the portfolio,” she said.
As of 2018, PNB's portfolio comprises public equity at 70.8 per cent, private investment (2.2 per cent), real estate (2.8 per cent), cash and money market (17.4 per cent), fixed income (6.5 per cent) and others (0.3 per cent).
Most of its investments, 96.7 per cent, are still domestic with the remaining 3.3 per cent in the overseas markets.