KWAP Recorded Highest Gross Income in 10 Years at RM9.03 Billion in 2017
Kuala Lumpur, 23 April 2018 – Kumpulan Wang Persaraan (Diperbadankan) [KWAP], today announced its financial highlights for year 2017, ending 31 December, showing an impressive investment performance as it registered a gross income of RM9.03 billion – the highest since its inception in 2007.
The total fund size increased to RM140.80 billion from RM125 billion while the overall gross ROI advanced to 5.77%, an increase of 0.42% from the previous year's ROI of 5.35%. The time weighted rate of return (TWRR) for the year was at 9.09%, almost double from preceding year's rate of 4.59%.
In announcing the unaudited figures of KWAP's financial performance for year 2017, the Chief Executive Officer of KWAP, Dato' Wan Kamaruzaman Wan Ahmad said, "We continued to deliver and outperform our benchmark, subsequently surpassing our target, resulting in double-digit growth of our fund size at 12.64% compared to the previous year's. In the last 10 years, the fund recorded an average growth of 12.98% per annum, with investment income continuing to be the largest contributor to asset growth."
Total collection for 2017 also increased by 4.96% which amounted to RM3.51 billion, comprising RM3.01 billion of pension contribution and RM0.5 billion of Federal Government's contribution.
Cumulatively, investment income remained the highest contributor to the fund in 2017 at 69%, followed by employers' contribution at 27%, while the portion from the Federal Government made up the remaining 4%.
In a span of a decade, KWAP's fund size had grown substantially by 235.72%, where it began with a modest fund amount of RM41.94 billion when it was first incorporated on 1 March 2007. Over a period of 10 years, KWAP has managed to sustain an average gross ROI of 6.14% annually.
"This outstanding performance did not come without any challenges especially in the current low yield and high volatility environment in the past years. Achieving sustainable asset growth is of utmost importance to us, as it enables KWAP to effectively manage our investments more diligently. We attribute this to the health of our portfolio, sound investment strategy, and robust risk framework," he added.
Moving Forward in Our Investment
"In view of the global outlook of the market, we will be reviewing our Strategic Asset Allocation (SAA) soon. This is to ensure that it remains vigorous and dynamic, while in tune with KWAP's long-term investment aspirations and the current realities. We will continue to seize new opportunities that could help us grow the fund, without compromising our risk appetite," commented Dato' Wan Kamaruzaman.
"We are now adopting the Total Return approach as our sole and primary performance metric, a more dependable method for retirement income strategies and in mitigating certain risks that are inherent to the investment portfolio, while generating consistent returns. These are testaments to our commitment in delivering sustainable growth that remains integral in our investment strategy and invariably benefits the income of future pensioners," he elaborated.
While elaborating on the financial results, Dato' Wan Kamaruzaman also said, "Responsible investment is fundamental to our investment policy and we hope to integrate these elements consciously by adopting practices that are unique to us. At the same time, we will continue to intensify our efforts in promoting environmental, social, and governance (ESG) values and standards in the companies that we have interests in."
The performance of KWAP's pension services is being monitored by the Government through a Service Level Agreement (SLA) which requires the organisation to achieve a minimum score of 90%. In 2017, KWAP achieved an SLA score of 95.6%, outperforming the target by 5.6%. Commenting on the achievement, Dato' Wan Kamaruzaman said, "The incorporation of the pension services department in 2015 allowed KWAP to implement various improvement measures in the past couple of years, resulting in increased efficiency in pension operations. We will continue to improve on our deliverables moving forward, and be more proactive. At present, works on various pension services and system enhancements and optimisations are already in progress."