GIC reports average annual real return of 4.9% over past 2 decades

SINGAPORE: Sovereign wealth fund GIC manages well over US$100 billion worth of assets in more than 40 countries globally. 

According to its latest annual report released on Thursday (Jul 30), it has generated an average annual real return of 4.9 per cent for the 20-year period ending March 31, 2015. This marks an increase from the 4.1 per cent it reported a year ago for the 20-year period ended in March 2014.

The real rate of return reflects what is made over and above global inflation. In USD nominal terms, the GIC portfolio generated an annualised return of 6.1 per cent over the same period.

As for portfolio mix, GIC said it has remained largely unchanged from the previous year in terms of asset classes and geographical distribution because it has a long-term investment horizon, and takes a bottom-up approach, picking investments based on individual merit.

GIC's exposure to equities in developed and emerging markets accounted for almost half its portfolio. Developed markets equities accounted for 29 per cent of the portfolio, while emerging markets equities 18 per cent.

The rest was in bonds, cash, real estate and private equity. On a geographical basis,

exposure to the Americas was highest at 43 per cent. followed by Asia at 30 per cent and Europe, at 25 per cent. Australasia accounted for the remaining 2 per cent.

Going forward, GIC said the investment environment over the next decade is likely to be more difficult for all investors. The sovereign wealth fund said asset prices, particularly in developed markets have risen strongly in the past five years, amid initial low valuations and loose monetary policy.  However, the outlook for economic growth and earnings has not improved by as much, so looking ahead, it expects real returns to be more modest than in the past.

Still, GIC said it will take advantage of short-term price volatility in order to generate good long-term real returns. It added that its exposure to emerging market equities will contribute positively to its portfolio over the long term.

- CNA/ly

CW8888:

No free lunch. Lower risk. Lower portfolio return will be expected!

Look at GIC's portfolio return. Right?

 

Temasek reports 3.7 per cent rise in net value of investment portfolio

SINGAPORE: Temasek Holdings on Tuesday (July 8) reported a 3.7 per cent increase in the net value of its investment portfolio - from S$215 billion in 2013 to S$223 billion in the last fiscal year.
In its annual Temasek Review report released on Tuesday, the investment company said Group net profit for the year ended March 31, 2014, rose 2.8 per cent to S$10.9 billion, from S$10.6 billion in the same period last year.

Total shareholder return (TSR), which is Temasek's key measure of performance, was 1.5 per cent for the past year, down from 8.6 per cent in the previous 12 months. It attributed this mainly to weakness in key Asian markets.

Temasek's  five-year TSR was 11 per cent and 

its 10-year TSR was 9 per cent, which the firm said reflects the steady growth in its portfolio. 

Longer term 20-year TSR was 6 per cent, and 

14 per cent for 30 years, it added. 

 

 

FINANCIAL SERVICES, LIFE SCIENCES TOP INVESTMENT SECTORS

In the last fiscal year, Temasek invested a total of S$24 billion and divested nearly S$10 billion, for a total net investment of $14 billion.

Temasek Chairman Lim Boon Heng said in the statement that "this year has been one of our most active years for new investments - the most active since the Global Financial Crisis". The new investments are driven by the continued recovery in the global economy as well as lower asset prices in Asia, which offered attractive investment opportunities.

Temasek said the top three sectors for investments during the year were in financial services, life sciences and energy. Among its investments in financial services was the acquisition of a 1.1 per cent stake in United Kingdom-based Lloyds Banking Group.

In life sciences, Temasek invested almost US$1 billion in Gilead Sciences - a firm that develops treatments for cancer, HIV and infectious diseases. It also invested about S$2 billion in Pavilion Energy, which focuses on Liquefied Natural Gas (LNG) in the energy space.

Temasek's key divestments over the year included Singapore's Tiger Airways and part of its stake in India's Bharti Telecom.

It ended the year with an underlying portfolio exposure of 31 per cent in Singapore, 25 per cent in China and 10 per cent in Australia. However, its exposure in North America and Europe grew to over 14 per cent from 12 per cent in the previous year.

Looking ahead, Mr Lim said that there will be both challenges and opportunities with the rapidly changing world.

"Even as we mark our 40th anniversary, we embrace the future with all that it brings. At 40, our journey has just begun," he added.

- CNA/kk

Singapore's GIC reports 20-year annualised return of 3.9%

SINGAPORE: The Government of Singapore Investment Corporation Pte Ltd (GIC) has reported achieving a 20-year annualised real rate of return, in excess of global inflation, of 3.9 percent for the financial year ended 31 March 2011.



The 20-year nominal annualised rate of return was 7.2 percent in US dollar (USD) terms.

The report presents the performance of the funds under GIC's management.

GIC has also published the 5-year and 10-year nominal rates of return to provide a sense of the on-going medium-term investment performance. GIC had previously only reported returns over 20 years.

The 5-year annualised return in USD terms was 6.3 percent net of fees with a volatility of 12 percent, while the 10-year annualised return was 7.4 percent with volatility 10 percent.

Mr Lim Siong Guan, GIC's Group President, said: "GIC has been on a steady course of increasing transparency since the release of its first "Report on the Management of the Government's Portfolio" in September 2008.

"This year, we have included the 5-year and 10-year nominal rates of return. These provide an intermediate measure of GIC's longer term performance. The 20-year annualised real rate of return remains the key focus for GIC as it is our mission to preserve and enhance the international purchasing power of the reserves."

Mr Ng Kok Song, GIC's Group Chief Investment Officer, said: "The 20-year annualised real rate of return for year ended March 2011 has improved from 3.8% of the year ended March 2010 to 3.9% of the year ended March 2011. This is due to the further recovery of equity markets.

"Although the global financial crisis is now behind us, we still face challenges in the economic and investment environment. The sustainable recovery of the developed economies remains uncertain, while the emerging economies face challenges in restraining inflationary pressure and currency appreciation.

"GIC will continue to respond nimbly to this challenging environment and maintain its focus on delivering good long-term investment returns for the Government."

- CNA/de