KUALA LUMPUR: Tabung Haji will consider returning to the original objective of its founding, which is to help Muslims perform the haj. The pilgrims fund board does not want to be seen merely as an investment fund, its chief said.
This philosophy, as explained by TH managing director and group chief executive officer Tan Sri Ismee Ismail, is guided by the fact that a whopping 7.5 million of its depositors have less than RM10,000 in savings.
TH, one of the world’s largest Islamic funds with a total fund size of about RM60 billion, has 8.8 million depositors.
Ismee said one of TH’s initiatives was to declare an additional two per cent in bonus to boost the savings of depositors who had not been able to perform the haj.
“We must now focus on the haj, instead of just on our investment activities,” the 51-year-old Ismee, who has been at the helm of TH for the past 10 years, told the New Straits Times and Berita Harian.
“I foresee next year, I won’t be surprised if our fund size touches RM65 billion by looking at the rate that we grew in the last 10 years.
“As we go along, we have to relook our objective, or be reminded of our original mission statement.”
“We do not want to be an institution where people just deposit money to collect the bonus without wanting to complete the haj. We do not want that to be the sole purpose.”
In a wide-ranging interview, the United Kingdom-trained accountant spoke of the challenges in managing the fund and how TH would have to tweak its investment strategy, given the tougher business outlook next year. Ismee said TH was committed to continue subsidising the haj to reduce the financial burden of pilgrims.
Its subsidies totalled RM150 million in the recent haj season. TH subsidises about half of the total cost of RM17,270 paid by each pilgrim.
By a rule of thumb, 50 per cent of its funds are invested in equities, 20 per cent in fixed income, 20 per cent in real estate and 10 per cent in the money market.
“Looking at the current market situation, we may have to reduce our equity portfolio by five to 10 per cent and invest in other asset classes. That is one strategy we are looking at.
“Of course, it is not wrong to have more investment in equities, when the equities market is good. But when the market is like this today, where it is challenging, then it is prudent for us to lessen our exposure there.
“That being said, even if it is challenging now Tabung Haji is in a much better position to withstand these challenges than we were during the Asian financial crisis of 1998, so Alhamdullilah for that.”
Ismee said Malaysian shares looked attractive at current levels.
He has built up TH’s assets since he took over 10 years ago, with funds growing from just RM13.3 billion in 2004 to RM60 billion now. It has become a major property player, not only in Malaysia, but also in Australia, the UK and Saudi Arabia. The fund made a staggering 200 per cent in returns on its property investment in UK recently,
Ismee said the 70:30 ratio between its Malaysian and foreign property portfolios would be maintained. But, it had no plans to expand beyond its existing four property markets.
Ismee said, given its fund size and holding power, TH was in a position to ignore the property cycle in the country. He said TH had proven to be a very successful Syariah-compliant savings institution.
“For the last 10 years, this is what we have been demonstrating. In terms of returns, it is about 6.2 per cent in returns per annum since I assumed this office.” Additional reporting by Lidiana Rosli
TOMORROW: Q&A in Business Times