KUALA LUMPUR, Nov 18 — At US$18.54 billion (RM62.13 billion), mutual-fund manager Michael Hasenstab single-handedly holds over 10 per cent of Malaysia’s government debt as of last month.

According to a report by financial daily the Wall Street Journal (WSJ), Hasenstab’s “unusual strategy” of investing in controversial regimes has catapulted US-based Templeton Global Bond Fund into the largest government-bond fund in the world.

“Our role is not regime change … It is investing in the long term,” Hasenstab was quoted saying by WSJ after buying US$400 million of newly-issued Ukraine bonds in early 2013.

The move had antagonised the US’s State Department for allegedly supporting then pro-Russia Ukraine government, which has since been ousted.

Hasenstab oversees US$73 billion for Templeton and US$118 billion for other mutual funds, investing it in around 20 countries simultaneously and even in places that would frighten away other investors, WSJ said.

In return, research firm Morningstar Inc said Templeton has delivered on average an annual return of 8.1 per cent in the past decade, in comparison to the 4.4 per cent average by all world bond funds.

Hasenstab told WSJ that its long-term performance has assured investors to the point that they have no qualms in putting some money in countries with controversial regimes.

The 41-year-old is the biggest single investor in Hungary, Ukraine and Uruguay, holding 14.2, 13.6 and 10.5 per cent of their debt respectively.

“Whether you’re talking about China or Ukraine, these countries are not monolithic … Peeling back the layers to see what motivates people, that appeals to me,” said Hasenstab.

Malaysia has cut back on its national debt, keeping it at 52.8 per cent of gross domestic product (GDP) as of June this year, according to Prime Minister and finance minister Datuk Seri Najib Razak this month.

Najib said the federal government currently owes RM568.9 billion, of which 97.1 per cent or RM552.7 billion is made up of domestic borrowings while 2.9 per cent or RM16.2 billion comprises offshore debt.

The quantum of Malaysia’s national debt, however, has progressively increased over the years, with the country borrowing RM547.6 billion in 2013, RM501.6 billion (53.3 per cent debt to GDP level) in 2012, RM456.1 billion (51.5 per cent) in 2011 and RM407.1 billion (51.1 per cent) in 2010.