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Khazanah and INA: taking the long view in a volatile market

Volatile markets may have led some institutional investors to rejig their portfolios, but two Southeast Asian sovereign wealth funds said they will stick to their mandate and focus on the long term.
Khazanah and INA: taking the long view in a volatile market

Malaysia’s Khazanah and the Indonesia Investment Authority (INA) plan to stay the course despite volatile markets, as long-term investors favour real assets amid an inflationary environment.

“We constantly review our asset allocation and monitor it closely during times of volatility. However, currently, we don’t plan to deviate from what we have been doing over the last few years,” a Khazanah spokesperson told AsianInvestor.

The 134 billion ringgit ($30.4 billion) has in recent years been rebalancing its portfolio to increase exposure to public equities, private equity and real assets globally, and it plans to continue to do so.

The bulk of its portfolio (54.1%) is allocated to local public markets, 16.1% to global public markets, and the remaining to private markets and real assets.

Khazanah Commercial Fund asset allocation 2021

Khazanah said it does not invest in fixed income as it is not required to maintain liquidity for regular dividend payments or withdrawals like pension funds and mutual funds.

INA’S PRIVATE FOCUS

The fledgling Indonesian Investment Authority, which was launched in February 2021, is focused on its current goal of establishing itself and hunting down infrastructure deals that support its strategic development mandate for its country.

Stefanus Hadiwidjaja, INA

“We are a long-term equity investor … we invest mainly in Indonesia and primarily in private investment. So, we have to bring in global investors to Indonesia and invest in strategic sectors to make a return, but at the same time help the way forward,” said INA’s chief investment officer Stefanus Hadiwidjaja at a panel discussion on Tuesday (June 28) organised by FinanceAsia, a sister publication of AsianInvestor.

To date, INA – which has raised $25.5 billion of capital since inception - has deployed funds to a single project in Mitratel – an Indonesian telecommunication tower operator, as part of its mandate to support infrastructure development that is strategic to the country. It has not invested in other local or global funds such as infrastructure funds.

On Monday (July 4), it announced that it had entered an agreement with China's Silk Road Fund that entailed an investment of up to Rmb20 billion in INA. The agreement covers a range of asset classes and fund of funds across all business sectors open to foreign investment.

Marita Alisjahbana, INA

“We are at present still focused on reviewing assets one by one through direct investment, therefore active investing, while at the same time starting to look into establishing a fund,” said Marita Alisjahbana, chief risk officer (CRO) of the Indonesia Investment Authority (INA) to AsianInvestor.

The other sectors high on INA’s list are transportation infrastructure such as toll roads and airports, healthcare, renewable energy and digital infrastructure, which includes the Mitratel project.

INFRA APPEAL

Javier Capapé, director of sovereign wealth research at IE University in Spain, told AsianInvestor that infrastructure is a popular asset class for long-term players such as wealth funds seeking protection from inflation.

“But yet, which infrastructure is a different question. Telecommunications infrastructure is nascent in multiple countries,” he said.

“We are seeing an adjustment of the investment preferences, towards inflation-hedging assets. In practice, that means less venture capital (VC) and equities, and more infrastructure and private debt,” Diego Lopez, managing director of Global SWF, told AsianInvestor.

He added that newer funds are likely to be risk-averse and may begin by investing in liquid assets, taking on more risk assets as they gain experience. 

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