A QUESTION OF BUSINESS | Some one and half years before Azman Mokhtar steps down after a 15-year stint as managing director of Khazanah Nasional Bhd, the government’s wholly-owned strategic investment fund, it looks like the daggers are drawn to poke holes in what is by and large an impressive achievement.

Unlike the other so-called strategic investment fund, the notorious 1MDB, which has already lost the country almost all the long-term money it borrowed with US$7 billion (some RM28 billion) unaccounted for, Khazanah has been transformed since 2004 into a solid entity which has strong controls, procedures, a chain of accountability, and a team of competent professionals managing over RM145 billion in investments.

It is not only extremely ironic but the height of ridiculousness that among the names being considered as Azman’s replacement is Arul Kanda Kandasamy, the chief executive of 1MDB since January 2015, who has done nothing to clarify the sad state of affairs at 1MDB or even to ensure the release of its long overdue annual report.

His appointment would make a mockery of Khazanah’s much stronger governance, good board representation, greater accountability, more transparency and much better performance than 1MDB which may be too much to make even for Prime Minister Najib Razak, who if he survives the elections, will make the final decision.

The major salvo against Khazanah, as with one or two other puzzling stories (see for instance, “Spinning 1MDB’s lopsided settlement”), came from across the Causeway from the Singapore Straits Times which made an unfair and ultimately wrong assessment of Khazanah’s performance over the years since 2004.

In a report titled “Khazanah feels the heat amid push to change its investment strategy”, the newspaper said: “Malaysia's sovereign wealth fund Khazanah Nasional is under pressure to show higher returns to boost government coffers, with senior state officials lobbying for changes to its management and investment strategy.”

Then it went on to add: “The bulk of the government's direct business investments is managed by Khazanah, which has returned an average of just RM825 million (S$270 million) in dividends annually over the past four years, from its RM145 billion worth of assets. This amounts to a less than 1 percent return a year between 2013 and last year.

“The Straits Times understands that there is a push by some within the Prime Minister Najib Razak's vast circle of advisers to change Khazanah's investment strategy, especially since the fund's managing director, Tan Sri Azman Mokhtar, is due to leave in mid-2019, after a 15-year run at the helm.”

Now, anyone who has the slightest knowledge of fund management should know that dividends alone is not the way to measure a fund’s return. You have to take into account the increase in the value of investments that it owns and gains from investments sold. And why choose just the period from 2013 to 2016? A fund is best assessed over a longer period.

The best way to report a fund’s performance is its total return - this is accepted as the de facto measure of fund performance in investment analysis...