Khazanah on track to become one of the world's best sovereign wealth funds

A good government which cares for its citizens will do everything in its power to uplift the living standards of its people.

Towards that end, Malaysia endeavours towards the betterment of its people by setting up Khazanah Nasional Berhad.

The sole aim of the sovereign wealth fund is to manage the government's money and generate income, of which a portion of the profits will go back to the government which will be spent on the betterment of the rakyat.

Khazanah has been doing a good job

Since its inception in 1993, Khazanah has grown leaps and bounds.

And now after 32 years, Khazanah has shown its mettle to emerge as the best sovereign wealth funds with a return of 24.6 percent.

In its survey, Global SWF said Khazanah has shot up to be the world's top sovereign wealth fund (SWF) beating world number one Norway's Norges Bank Investment Management and New Zealand's NZ Super Fund.

How did Khazanah measure up against other sovereign wealth funds?

To put things in perspective and gauge its performance, Global SWF has benchmarked Khazanah against other global sovereign wealth funds (SWF).

In its survey: Sovereign wealth funds, who won 2024? Who struggled?  Global SWF said it was a rollercoaster year in 2024 for SWFs.

Some funds soared on stock market gains while others struggled with underperformance, rising fees and real estate’s losses. So, who came out on top?

Key takeaways from 2024

Global SWF said it was a good year for Khazanah in 2024 when it chalked a 24.6 percent return fuelled by Malaysia's economic growth.

As a comparison, Norway's Norges Bank Investment Management made a return of 13 percent, New Zealand Super Fund (15.62 percent), Azerbaijan State Oil Fund (6 percent), Australia's Future Fund (12.2 percent), Chile Pension Fund (12 percent) and Alaska Permanent Fund Corp (8 percent).

Global SWF however warned that the years ahead will be challenging with global megatrends and all SWFs need to prepare or face a difficult investment environment.

Khazanah growing strong

In its Khazanah Annual Review 2025 last week, the government-owned agency has recorded a cumulated average growth rate of 5.9 percent or RM71 billion.

It recorded RM5.1 billion profit from operations in 2024 riding on the strong performance of Malaysian investment and significant value initiatives.

It registered strong NAV TWRR (net asset value time weighed return rate) of 24.6 percent, an increase from 5.7 percent in 2023.

Its net asset value also spiked by RM18.8 billion to RM103.6 billion from 2023 marking a significant growth in investments.

Khazanah continues to create long term value creation, catalysing innovation and delivering socio economic outcomes.

Giving back to the people

Khazanah said a total of RM19.1 billion cumulative dividends have been paid to the government and a cumulative RM90.1 billion in shareholders return.

Khazanah remains committed in fulfilling its mandate to deliver sustainable returns to the nation and growing Malaysia's long-term wealth.

Khazanah's fund managers at their best

For any fund management organisation to succeed, it must be spearheaded by a team of eagle-eyed fund managers.

Similarly, Khazanah would comprise a team of seasoned investment teams able to spot a good buy from a mile away or vice versa.

Among the key investment trends, public equities ruled, of which heavy exposure to stocks delivered the biggest wins.

The real estate sector struggled bogged down by high interest rates which hit the commercial property hard.

The renewable energy sector meanwhile had many woes, of which some funds saw double digit losses.

Khazanah will continue to spur the GLCs

It is important to take note that government-linked companies or GLCs will continue to play an important role for the government.

GLCs will strive to make profits for the government which will ultimately seep back to the rakyat (people) via education, medical and cash aid.

Thus, for Khazanah to thrive, it must also inject investments into GLCs (in the area of energy transition) such as Tenaga Nasional Berhad, Cenviro and UEM Lestra.

In the area of connectivity, Khazanah also has a presence in Malaysia Airlines and Malaysia Airlines.

In digitalisation, Khazanah has a foothold in Axiata, CelcomDigi and TM and it also transform firms such as catalysing mid-tier firms, rejuvenate the venture capital ecosystem and strengthens the semiconductor ecosystem.

Khazanah stewarded by capable leaders

Khazanah is where it is today stewarded by its capable leaders led by its managing director Datuk Amirul Feisal Wan Zahir.

Under his stewardship, Khazanah is able to deliver sustainable returns for Malaysia growing the nation’s long-term wealth.

“We achieved a significant growth in our portfolio in 2024, driven by the strong performance of our Malaysian investments, particularly our holdings in the major constituents outperforming the KLCI, on the back of strong domestic market performance, continued growth of public equities in developed markets and the recovery in emerging markets.

Our positive performance is also driven by the Ekonomi MADANI framework, championed by the Prime Minister of Malaysia (Datuk Seri Anwar Ibrahim), showcasing how strategic investments and sustainable practices can drive inclusive economic growth," he said in a statement.

Riding on the robust Malaysian economy

Khazanah was also able to achieve the stellar financial results riding on the burgeoning Malaysian economy.

Malaysia’s economy also demonstrated strong resilience in 2024, with gross domestic product or GDP growth expected to accelerate at between 4.8 percent and 5.3 percent.

The ringgit meanwhile strengthened by 2.7 percent against the US dollar, and the FBM KLCI achieved an impressive 12.58 percent gain.

This robust economic environment, along with Khazanah’s disciplined investment approach, contributed to our strong performance for the year, with NAV TWRR reaching 24 percent, a significant increase from 5.7 percent in 2023 said Amirul Feisal.

Moving forward: what's next for Khazanah

No doubt, 2025 will be a challenging year for Khazanah.

"Looking ahead, global megatrends are expected to continue shaping the medium-term global environment with their impacts already evident.

For short and medium term global and macro markets in 2025, Khazanah will have to be wary on global economic developments, higher government spending and external economic developments such as in the US and China.

Khazanah will also bolster its efforts in Artificial Intelligence to transform industries and boost productivity.

Khazanah will also prepare itself against global rising geopolitical tensions and trade fragmentation.

Khazanah also has to contend with higher volatility across all asset classes, volatile commodity prices and challenging energy scenario.

For long term scenario, the global megatrends increasing political and economic fragmentation and changing global weather patterns which could change the way companies do businesses.

The fund also established Jelawang Capital, a Dana Impak Initiative to accelerate growth of Malaysia'a venture capital ecosystem.

This will impact 8,222 youths through the K-Youth programme including from B40 communities.

Advancing Malaysia

Khazanah also pledges to continue building a resilient portfolio with a strong governance to create value and create societal impact towards advancing Malaysia.

This involves disciplined investment approach anchored on robust processes and commitment to high governance standards.

Firstly, Khazanah will drive value creation for Malaysia by growing firms and advance energy transition, digitalisation and connectivity.

Secondly, Khazanah will diversify and strengthen global portfolio to beef up resilience against global megatrends.

Thirdly, Khazanah will execute Dana Impak projects with focus on transforming firms.

Fourthly, Khazanah will accelerate decarbonisation and sustainable growth and last but not least deliver societal value by building capacity and fostering vibrant communities.

Khazanah still has a long way to go though

Certainly, Khazanah's sterling performance for the year 2024 underlines its decades old vision, mission and properly executed strategies in managing one of the most government significant and strategic assets.

Associate Professor Dr Aimi Zulhazmy Abdul Rashid said Khazanah was highly involved in the national corporations in most GLC and GLIC, entrusted with billions of public funds in investments arsenals.

"Khazanah has a huge responsibility and accountability in the nation's building in the past, present and future; certainly, the financial year 2024 result of 24.6 percent positioned Khazanah as among the best performing sovereign funds globally.

"Nonetheless with a smaller Asset Under Management (AUM) compared to larger funds like Norges Bank Investment Management (NBIM) or NZ Super Fund, Khazanah Nasional Berhad has still a long way to go into become a significant player in the global market," said the UniKL business school lecturer.

Certainly, its performance was encouraging and hopefully Khazanah will grow in size to benefit the people of Malaysia in the long term.

Khazanah is for all Malaysians

Maybe some Malaysians don't realize it but Khazanah is owned by all Malaysians and it is striving very hard to uplift the living standard of the people.

Whether the people are in the villages or in the cities, Khazanah invests taxpayers’ money in investment tools and the profits will be channelled back to the government which in turn will spend the profits to build and enhance the country's infrastructure.

Khazanah is for all Malaysians and will do its best to, quote "Advance Malaysia”. - DagangNews.com