GIC’s annualised real return at highest since 2015; remains cautious amid uncertain environment

Sumary of GIC’s annualised real return at highest since 2015; remains cautious amid uncertain environment:

  • SINGAPORE: Singapore sovereign wealth fund GIC posted its highest returns since 2015 for the latest financial year, but said it remains cautious in an uncertain macro environment due to a protracted COVID-19 pandemic and stretched valuations.
  • The 20-year metric – a primary indicator of GIC’s investment performance – is a “rolling” return where years are dropped and added as the computation window moves.
  • The spike in the real rate of return was partly due to the “poor year” in FY2000/01, caused by the dot-com crash, being dropped out of the 20-year window, said GIC’s chief executive officer Lim Chow Kiat during an online press briefing ahead of the report’s release.
  • (Graph: GIC’s annual report) Nominal bonds and cash, which are generally seen as safer investments, accounted for the biggest share of GIC’s portfolio at 39 per cent at the end of the last financial year, a drop from 44 per cent a year ago.
  • This “diversified portfolio and cautious investment stance” has continued into FY2020/21 given elevated asset valuations and uncertainty from potential inflationary pressures, GIC said in its report.
  • GIC, which marks its 40-year anniversary this year, is one of three entities managing Singapore’s reserves.
  • The other two are the Monetary Authority of Singapore and Temasek Holdings.
  • It does not own the assets it manages and does not invest in Singapore.

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