Singapore $360 Billion Sovereign Wealth Fund GIC Reports 7% Nominal Returns & 4.2% Real Returns Over 20 Years
28th July 2022 | Singapore
Singapore $360 billion Sovereign Wealth Fund GIC has reported 7% nominal returns & 4.2% real returns over 20 years in the GIC 2021/2022 Report. Singapore GIC CEO Lim Chow Kiat: “The investment landscape is shifting rapidly. Years of concerns over deflation have turned into worries of elevated inflation, forcing economic policymakers to reverse stimulus policies. At the same time, the clock for the climate crisis is ticking, pandemic risk lingers on, and geopolitical conflicts and domestic political schisms are growing. GIC will continue to adapt to these changing realities while remaining anchored to our mandate, values, and investment principles.” GIC: “We continue to generate good, stable real returns. Our diversified portfolio and cautious investment stance helped to cushion GIC’s performance from the market correction in early 2022. This posture was held throughout FY2021/22, given elevated asset valuations and uncertainty arising from potential inflationary pressures. We have kept our emphasis on being prepared for multiple scenarios, maintaining price discipline, adding optionality, and expanding our bottom-up investment activities.” (GIC did not release info on total assets in the report. Assets of $360 billion is extracted from 2022 World Economic Forum official profile on GIC. Other source estimated assets of $400 billion to over $700 billion.) View: GIC 2021/2022 Report | How GIC Manages Portfolio
“ Singapore $360 Billion Sovereign Wealth Fund GIC Reports 7% Nominal Returns & 4.2% Real Returns Over 20 Years “
GIC, formerly known as Government of Singapore Investment Corporation, is a sovereign wealth fund of the Government of Singapore. GIC is a global investment firm with $360 billion in assets under management. Established in 1981, it manages Singapore’s foreign reserves and is positioned for long-term and flexible investments throughout asset classes, including public equities, fixed income, real estate and private equity. In private equity, GIC invests through funds and directly in companies, partnering with its fund managers and management teams. GIC employs 1,300 people in offices in Singapore, Beijing, London, Mumbai, New York, San Francisco, São Paulo, Seoul, Shanghai and Tokyo. (2022 World Economic Forum on GIC)
Singapore GIC Report
Generating good, stable returns over inflation
Over 20 years up to 31 March 2022, the GIC Portfolio’s annualised nominal and real (above global inflation) returns were 7.0% and 4.2% respectively per year.
Portfolio Diversification in an Environment of Resurgent Inflation
The resurgence of inflation has been a key theme shaping the global investment environment. It is especially important for GIC given our mandate to preserve and enhance Singapore’s international purchasing power for the foreign reserves that we manage. As the environment changes, diversifying our portfolio and engaging in alternative scenario planning remain at the heart of our portfolio construction philosophy.
Investing in a World of Transition
In 2021, the recovery in economic activity on the back of vaccine rollouts and reopenings brought with it challenges such as a significant increase in inflation across advanced and emerging economies. This was driven by COVID-related supply disruptions, a rapid recovery in demand for certain goods, and rising wages. Beyond the cyclical horizon, there are secular trends that have been reinforced by developments over the past few years related to COVID-19 and the flare-up in geopolitical tensions, such as:
- Technological advancement
- Pressures to reduce inequality of incomes and opportunities
- Transition towards a low-carbon economy
GIC is committed to enabling the global transition to a net-zero economy through our investments and operations. We believe that it is critical to focus on making a positive impact in the real economy. To do this, it is more constructive to actively engage and support companies in their transition towards long-term sustainability than to mechanically divest from certain industry sectors.
Liew Tzu Mi, GIC Chief Investment Officer of Fixed Income & Chair of the Sustainability Committee:
“We believe most companies are in the middle of the spectrum and at varying stages of their transition depending on factors such as their history, the nature of their markets, and the technologies available to them. GIC’s role as a long-term investor is to encourage their transition efforts.”