KUALA LUMPUR: The Social Security Organisation (Socso) has developed a five-year Investment Strategy Blueprint encompassing a review of policies, portfolio strategy and management, and strategies of all asset classes and enablers.
The blueprint outlines the implementation strategies of each asset class and investment opportunities in the quest to achieve higher long-term expected returns of between five to six per cent annually for the next five years until 2022.
Socso has also reviewed its Investment Policy and Guidelines and Investment Policy Statement to provide guidance to its Investment Division to live up to the expectations of Socso’s stakeholders in establishing market best practices in investment strategies and adhering to good investment.
Its investment strategies focus on capital preservation, high-yield within risk-return spectrum, long-term and sustainable returns, ethical investment, high level of corporate governance, becoming a centre of excellence in investment, and diversification.
Socso chief investment officer Suzana Idayu Wati Osman said Socso aimed to achieve superior and consistent investment performance as guided by its fiduciary duties to its stakeholders, dynamic investment strategies within well-defined risk parameters, and adherence to high corporate governance and practices.
From the total assets under management (AUM) of RM25.8 billion (as at June 30, 2017), she said Socso has so far invested up to 20 per cent in equities, 77 per cent in fixed income and money market instruments, and three per cent in real estates.
“A clear equity strategy is established in the overall investment strategies. The aim is to increase equity investment to 28 per cent by 2020.
“Our target returns on equity investment are market driven, with alpha derived from active portfolio management strategies. The end targets are to meet the target return and outperform the benchmarks,” she said.
Suzana added that Socso is also refining its fixed-income and money market strategies to align with global best practices.
In line with its strategic priorities on capital preservation, Socso still targets a high proportion of fixed-income instruments, that is 60 per cent of its AUM.
“It focuses on high-grade investments with strong credit ratings,” she said.
On real estate investment, Suzana said Socso’s strategic priorities were capital preservation, high-yield and sustainable returns, and potential gains.
Last year, Socso bought Menara NU2 at KL Sentral, which is currently fully occupied with a return of six per cent per annum, she said.
“Socso targets its real estate return at five per cent of AUM by 2020,” she said.
Suzana said Socso is also embarking on a new asset class, namely private equity investments, with a target of up to two per cent of AUM by 2020.
“It’s primary objectives are high-yield and sustainable returns, and potential growth,” she said.
On foreign investment, Suzana said it comprised approximately four per cent of AUM.
The target foreign investments in fixed income and equity by 2020 is 10 per cent of AUM.
“Foreign investment signifies Socso’s aspiration to embark on active global investment management for global visibility and diversification strategy.
“Overall, the asset allocation strategy would lead to enhance sustainability by moving towards market-driven Strategic Asset Allocation,” she said.
Suzana asserted that strong ethical values were being inculcated among Socso employees, especially investment personnel.
Socso’s ethical values are supported by its corporate initiatives such as taking the yearly integrity pledge with the Malaysian Anti-Corruption Commission and enforcing the “No Gift Policy” since December 2015.
As part of its initiative to strive for good governance, Socso became a signatory to the Malaysian Code for Institutional Investors on July 31, 2017.
The code spells out guidance on effective exercise of stewardship responsibilities towards the delivery of sustainable long-term value to its ultimate beneficiaries. – Bernama