Malaysia’s pension fund in an attempt to raise returns investing in higher-yielding assets has a plan to put as much as $1.5 billion in overseas stock and bond markets following the liberalisation of foreign exchange regulations. Employees Provident Fund’s Chief Executive Officer Azlan Zainol said the fund is seeking approval from the government for a $1 billion investment in foreign private equity funds and fixed-income securities.

The fund has assets equivalent to $64 billion and has already made the decision to invest $500 million in Asia-Pacific region’s stocks. The regulation passed on March 23 allows fund managers to raise their proportion of foreign holdings to 30% of their assets from previously mentioned 10%.

``We are looking at alternative investments right now,’’ Azlan said in Turkey. ``We expect a better return than our existing investments.’’

The Malaysian pension fund is seeking to boost returns that have been shrinking in the past years. In the first quarter of 2005 the fund’s return comprised 1.29%, down from 1.34% last year. The reduction in returns may tell on the savings of the nation’s 10.8 million workers contributing 11% of their salaries to the fund, with 12% contributed by employers.

``We have put aside $250 million to invest in private equity directly over the next two to three years, locally,’’ Azlan said. ``If the opportunity comes, we will probably invest abroad as well.’’

The investment in private equity, although somewhat risky, has so far yielded 15% in return.