LTAT’S STRONG FINANCIAL PERFORMANCE REFLECTS EFFECTIVE MANAGEMENT, SAY ECONOMISTS

By Siti Noor Afera Abu

KUALA LUMPUR, March 28 (Bernama) -- The Armed Forces Fund Board (LTAT) has demonstrated strong financial performance, highlighted by its highest dividend payout in seven years that reflected its effective management capabilities, said economists.

Putra Business School's Master of Business Administration programme director, Professor Dr Ahmed Razman Abdul Latiff, attributed this success to the support of LTAT’s board of directors, as well as an improved domestic economic climate last year compared to the previous year.

He said LTAT's positive performance is directly related to domestic equity market growth last year where Bursa Malaysia recorded a growth of more than 12 per cent for the FBM KLCI. “As long as the domestic market continues to perform positively, LTAT will always be able to sustain its financial performance. With the projected 4.5 to 5.5 per cent gross domestic product (GDP) growth, LTAT's prospects for this year remain bullish,” he told Bernama.

Dr Ahmed Razman said a 5.25 per cent return is considered competitive and better than what fixed deposits can offer.

On Thursday, LTAT announced a 5.25 per cent total payout for 2024, comprising a five per cent dividend and a 0.25 per cent bonus, its highest in seven years, with a total distribution of RM514.2 million, marking an increase from RM485.08 million in 2023. 

Govt policies strengthen LTAT’s financials

Dr. Ahmed Razman emphasised that government policies play a crucial role in supporting LTAT’s financial health, as policymakers aim to ensure a positive impact on businesses, including LTAT. Therefore continuous engagement between LTAT and the government is very important to ensure there will be no misalignment to the new and future policies introduced by the government.

Echoing this view, Sunway University economics professor Dr Yeah Kim Leng stated that LTAT benefits from supportive government policies in various ways, such as preferential treatment in strategic investments and procurement contracts for businesses directly or indirectly owned by LTAT.

For sustained growth, he noted that LTAT must focus on emerging, fast-growing, and highly profitable industries that align with its strategic investment plan to maximise returns in the short, medium, and long term.

“Investments in high-value industries will not only drive LTAT’s growth but also enhance economic productivity and move Malaysia up the value chain,” he added.

LTAT urged to expand asset diversification

Yeah praised LTAT’s strong financial performance, noting that alongside the positive results of other public savings and investment funds, it would contribute to higher household income and stronger consumer confidence.

He emphasised that for long-term funds, financial sustainability hinges on sound asset allocation, with diversification playing a crucial role in balancing risk and return. “As such, having all the investments in the domestic market poses a significant risk should the local economy falter. The fund should gradually develop its international investment capability and diversify into safe foreign assets as one of the investment asset classes,” he said.

Dr. Ahmed Razman echoed this view, stressing that asset diversification is essential since different asset classes perform differently under various economic conditions. He pointed out that LTAT’s decision to increase its equity exposure last year, amid the stock market’s double-digit growth, led to better returns.

“Malaysia's domestic market does have its advantages and disadvantages. Global uncertainties can affect domestic economic prospects. LTAT should review its strategic asset allocation investment model to consider a wider diversification portfolio for its investments, which could include foreign investments,” he added. 

-- BERNAMA