​Fixed Income

External Fund Managers (EFM)

As at 31 December 2016, total funds at cost being managed by the external fund managers (EFMs) is at RM4.44 billion, accounted for 3.42% of overall KWAP fund size. In terms of geographical exposure, 75.87% of the externally-managed assets are invested in the domestic bond market and the remaining 24.13% are globally invested.

Domestic

As at 31 December 2016, total funds at cost managed by domestic EFMs amounted to RM3.37 billion, which is 4.80% of overall fixed income investments of RM70.00 billion. As at 31 December 2016, domestic EFMs recorded an aggregate realized income of RM202.25 million, representing an average ROI of 6.00%.  ​

International

As at 31 December 2016, the international EFM exposure amounted to USD316.85 million. In 2016, International EFM portfolios recorded an aggregate realized income of USD14.88 million, representing an average ROI of 4.70%.   

 

As part of KWAP's monitoring process, performance reviews were regularly held on quarterly basis with all EFMs and on-site visits were conducted at the EFMs premises in ensuring their adherence to the terms of contract as well as understanding their best business practices. Throughout 2016, 67 quarterly meetings, 7 annual visits and 3 compliance visit were conducted to observe the EFM's compliance with relevant internal control procedures and best business practice with regards to day-to-day trading activities as well as middle and back office operations. ​

KWAP holds several discussions with the EFMs on investments and operational matters as part of its monitoring process, which includes on-site visits at fund manager's premises in ensuring their adherence to the terms of mandate as well as understanding their business best practice. Apart from that, regular tele-conference discussions were also conducted for investment reviews and market outlook from the EFMs' perspectives.

​Portfolio performance reviews are regularly held on quarterly basis and for some portfolios, on a monthly basis in order to ensure their income targets are met. As part of KWAP's monitoring process, on-site visits were also conducted at the EFMs respective offices occasionally. Throughout the third quarter of the year, sixty nine (69) quarterly and monthly meetings, four (4) annual visits and two (2) compliance visit were conducted to observe their compliance with relevant internal control procedures and best business practice with regards to day-to-day trading activities as well as middle and back office operations. As part of KWAP efforts on engaging with the EFMs, there was a CEO Mandate event that was held during the beginning of the year.