Khazanah Nasional Bhd is implementing a total portfolio approach (TPA) to enhance its risk management strategy amid an increasingly complex global landscape. The move aims to complement its existing asset allocation framework by providing a comprehensive view of risks and exposures across its entire portfolio, rather than focusing on individual asset classes.
Datuk Amirul Feisal Wan Zahir, Khazanah’s managing director, outlined the shift during his opening remarks at the Khazanah Megatrends Forum (KMF) 2026 held in Kuala Lumpur on October 5. He explained that TPA enables the sovereign wealth fund to better assess interactions between different investments and the underlying risks they pose, moving beyond the traditional strategic asset allocation model that typically follows predetermined asset class allocations.
This approach forms part of a broader strategy to not only absorb external shocks but also to develop "agency" capable of counterbalancing such disruptions. Amirul Feisal emphasized that the fund’s resilience goals have evolved over recent years, aiming to ensure no single external force dictates its trajectory.
The forum’s theme, “Who’s Got the Power? Watching the Watchmen in an Imbalanced World,” explored the multifaceted nature of power across the global economy. Amirul Feisal highlighted several megatrends affecting Khazanah’s investment outlook, including inequality, climate change, demographic shifts, and artificial intelligence (AI), framing these challenges as contests for control over resources, technology, and markets.
He identified three key sectors attracting significant global investment: energy, technology, and security. In energy, the strategic significance of chokepoints like the Strait of Hormuz illustrates how control over supply routes can influence global prices and inflation. Technology faces its own competitiveness, with AI-related spending reaching nearly US$770 billion worldwide, though a Massachusetts Institute of Technology study noted that 95% of enterprise AI pilots have yet to demonstrate measurable returns. This raises concerns about sustainability, particularly given the backdrop of elevated U.S. debt exceeding US$40 trillion.
Amirul Feisal pointed to Malaysia’s growing role in the AI and data center industries, posing the critical question of whether the country will remain a passive host of infrastructure or successfully capture value within these sectors.
Security considerations are driving countries to reduce reliance on external sources across defense, food supply, and labor markets. Control over critical inputs—whether through strategic policies or geographic advantage—translates into significant leverage.
Dominating these trends is a broader competition for capital. The rise of passive investment channels, which direct funds based on index composition, heavily favors the United States, accounting for nearly two-thirds of the MSCI All Country World Index despite the country contributing about a quarter of global GDP. This capital concentration has not consistently benefitted the wider economy; corporate profits and productivity have increased while labor’s share of income and general consumption have become more concentrated among wealthier households, a phenomenon described as a “K-shaped” economy.
Amirul Feisal concluded that large economies such as the U.S., Europe, and China have advantages owing to substantial domestic markets and public capital reserves, which provide buffers against external shocks. Malaysia, he noted, lacks similar cushions and must pursue greater diversification and resilience.
The 21st Khazanah Megatrends Forum convened nearly 1,500 delegates over two days to examine the shifting power dynamics in the global economy and their implications for investors, businesses, and policymakers.