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You
are here:
 Investments > Fixed Income
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"KWAP achieved net ROI and TWRR of
7.34% and 8.88%
respectively in 2010"
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| About Fixed Income Department
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| Fixed Income such
as government bonds, corporate bonds and short-term debt papers comprises
approximately 70-73% of KWAP's investment portfolio. KWAP is an active
player in both the local primary and secondary capital markets. |
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Our main objective as Fixed Income fund managers revolves around the
search for the best value fixed income investment which minimises risk
and maximises return on our investment portfolios over various market
environments. |
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Our strategic objective is to outperform the benchmark consistent with
a prudent level of risk and in accordance to the KWAP Investment Policy
and Guidelines. |
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We strive to achieve high total rate of return on investment by judicious
selection and trading of fixed-income instruments, while maintaining
a prudent level of risk in accordance with KWAP's investment policies.
We have started several initiatives that enable a more proactive approach
in the management of our fixed income investments. One such initiative
is the Institutional Securities Custodian Program (ISCAP) which aims
to enhance the secondary bond trading market and subsequently increases
the fee-based income of KWAP. Also, the credit assessment processes
of Fixed Income have been established with the goal of minimising the
risk and maximising the return on our investment portfolio. |
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We target to build diversified portfolios from a global set of opportunities
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- Construction of portfolios that are in line with the Investment
Policy and Guidelines of KWAP;
- Identification of macro investment themes that drive the Fixed
Income markets, with emphasis on the duration, yield curve and individual
sectors;
- Development of in-house credit scoring and assessment system;
- Risk allocation via quantitative analysis to maximise investment
efficiency.
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| Fixed Income Assets Class |
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The goal
of Fixed Income asset allocation is to create an efficient mix of investments
or assets classes with the potential of capital appreciation and high
interest income yield while tolerating risk or mitigation of investment
volatility in different economic and market environments.
The Fixed Income portfolio of KWAP comprises 4 main asset classes namely
sovereign bonds, corporate bonds, loans and money market instruments.
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| ( mouseover
and click on the image to view detail of each asset class) |
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| Malaysian Government Securities
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| Overview |
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- The MGS portfolios are constructed to maximize yield while allowing
the opportunity for capital appreciation via appropriate duration,
issue, and yield curve deployment. We are very active in the primary
and secondary market, managing portfolio positions via duration
management and the coupon return via the maximization of portfolio
yield.
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| Core Objectives |
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- Investment of KWAP funds in fixed income securities for purpose
of investment and trade strategy.
- Generating both short and long term competitive returns from
fixed income securities in accordance to the KWAP Investment Policy
and Guidelines.
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| Type of investment instrument
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Various
Forms of Government securities in Malaysia
- Malaysian Government Securities (MGS) - interest bearing long-term
bonds issued by the Government of Malaysia (GOM) with an original
maturity of more than one year. Funds raised are used to finance
development expenditure.
- Malaysian Treasury Bills (MTB) - short-term securities issued
by the Government of Malaysia with the original maturity of less
then one year.
- Government Investment Issues (GII) and Malaysian Islamic Treasury
Bills (MITB) - long-term and short-term non-interest bearing securities
issued by the Government of Malaysia based on Islamic principles.
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| Money Market |
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| Overview |
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- Investment of KWAP Funds is deposited in a wide range of money
market products at attractive yields to insure best return value
on our investments.
- Funds are deposited in the Central Bank of Malaysia (Bank Negara
Malaysia), licensed bank or financial institution as defined under
the Banking and Financial Institutions Act 1989 (Act 372), development
financial institutions as defined under the Development Financial
Institutions Act 2002 (Act 618), Islamic bank under the Islamic
Banking Act 1983 (Act 276) and duly licensed bank or financial institution
outside Malaysia.
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| Our Core Objectives |
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- Maximizing the returns of interests and dividends for bank deposits
and money market instruments.
- Maximizing of investment returns founded on a reasonable level
of risks via money market instruments.
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| Types of instruments invested
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- Investment of KWAP Funds in money market instruments in conventional
& Islamic Market.
- Money market instruments include:
- Treasury Bills
- Bank Negara Monetary Notes
- Banker’s Acceptance
- Deposit Certificates
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| Performance: |
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- As at 31 December 2008, KWAP’s investment in money market deposit
comprised Fixed Deposits, Short Term Placements, Bankers Acceptances
and Negotiable Instruments of Deposit in both Islamic and Conventional
instruments.
- Total holdings in money market deposit grew by 13.32%to RM14.14billion
in 2008 from RM12.48 billion in 2007.
- In 2008, money market contributed gross income of RM556.05 million,
an increase of 104.81% from RM271.49 billion achieved in 2007.
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| Loans |
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| Core Objective |
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- Investment of KWAP funds by way of giving out loans to the Federal
Government, Malaysian State Governments and public authority bodies,
corporate bodies in which the Federal Government has an interest
and in any company.
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| Lending Criteria |
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- Loans are channeled to development projects with commercial
value
- Organizations with high capability of servicing the loan and
fulfill their responsibility as a borrower.
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| Types of Loans |
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- Investment of KWAP funds in fixed or floating rate loans based
on the KWAP Investment Policy and Guidelines.
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| Credit Process
Flow |
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| Contact Us |
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For further
clarification, please contract us at :
Address:
Level 4, 5 & 6, Menara Yayasan Tun Razak,
200, Jalan Bukit Bintang,
55100 Kuala Lumpur. |
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| Corporate Bonds |
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| Overview |
- Corporations have turned their attention towards the bond market
as a viable alternative to bank borrowings and the equity market.
As such, institutional investors as such KWAP are able to adjust
our risk-return profile through the trading of various securities
available in the market.
- KWAP invests in both conventional and Islamic papers comprising
Fixed Rate Serial Bonds, Medium Term Notes as well as Commercial
Papers.
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| Our Investment Approach |
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A dedicated team to oversee credit portfolio
and enhance investment process. We seek to add value in the fixed income
market by utilizing four primary approaches:
- Analytical credit assessment of securities with the implementation
of in-house credit scoring system
- Stringent security selection – minimum rating requirement for
bond investment is A3 (RAM) or A-(MARC)
- Ongoing surveillance on current securities in our holding to
contain credit risk and take precautionary measures should adverse
credit events are developing
- Taking advantage of yield curve structure and position our portfolio
accordingly
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| Performance |
- In 2008, KWAP’s overall holdings of corporate bonds, inclusive
of funds managed by external fixed income fund managers grew to
RM8.34 billion from RM6.21 billion at the end of 2007.
- Gross income was up by 109.54% to RM363.36 million in 2008 from
RM173.41 million in 2007.
- KWAP’s investment in corporate bonds comprised RM4.69 billion
in conventional corporate bonds, RM3.15 billion in Islamic corporate
bonds and RM500 million managed by external fixed income fund managers.
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Gross Income from Corporate Bond Investment (RMm)
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| External Fund Managers
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| Beginning 2011, external Fund Manager portfolio was absorbed under the Fixed Income Department which aimed in streamlining overall investment strategies and decision making for Fixed Income asset class. As at 31 December 2011, Fixed Income investment outsourced to external managers stood at RM1.92 billion which accounted for 2.5% of overall KWAP fund size. In terms of geographical exposure, 45% of externally managed funds were invested in the domestic bond market and the remaining 54% invested globally. Overall, external fixed Income fund managers recorded realized income of RM62 million, representing an average ROI of 5.18%. The realized income was derived from capital gains and coupon receipts. |
FusionCharts
FusionCharts
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Web Rate - Malaysia Government
Securities
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FusionCharts
FusionCharts
Web Rate - Private Debt Securities
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FusionCharts
FusionCharts
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About Fixed Income Department
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Fixed Income Assets Class
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Performance
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External Fund Managers
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Web Rate - Money Market
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Web Rate - Malaysia Government Securities
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Web Rate - Private Debt Securities
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