Singapore state fund revamps investment strategy

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GIC2Singapore’s sovereign wealth fund, which has recently changed its name from Government of Singapore Investment Corp. Private Ltd., said it will shift its global investment strategy to better reflect the current economic situation on the world markets and to reach higher long-term yields.

GIC will split its portfolio into one that’s actively managed, and another that tracks the overall market, it said during the presentation of its annual report on August 2, which showed steady average annual results of about 4 per cent yield over 20 years.

With active management, the $248 billion asset fund wants to achieve better results in a market it described as “complicated.”

The new investment framework explicitly isolates three drivers of GIC’s long-term performance. Firstly, the Reference Portfolio, based on a balance of 65 per cent global equity and 35 per cent bond market indices, defines the amount of risk the government is prepared to have GIC take. Secondly, the Policy Portfolio represents GIC’s asset allocation strategy to improve long-term returns compared to the passive Reference Portfolio. Third, the Active Portfolio allows the GIC management to execute skill-based and opportunistic strategies.

The report showed that equities held by GIC increased to 46 per cent in the year ended March 2013 from 45 per cent a year earlier. Bonds rose to 21 per cent from 17 per cent and it reduced cash holdings to 7 per cent from 11 per cent a year earlier.

Citigroup and UBS are the fund’s largest investments. Holdings in Europe declined to 25 per cent of its portfolio, down one percentage point from the previous year, according to the report. Those in the UK fell to 8 per cent from 9 per cent, while investments in the euro area were unchanged at 11 per cent. Assets in the Americas rose as the US increased to 36 per cent of GIC’s portfolio from 33 per cent a year earlier.

The allocation for North Asian markets was unchanged at 13 per cent of GIC’s portfolio. The region includes China, Hong Kong, South Korea and Taiwan. In China, GIC holds stakes of 40 listed Chinese companies, including  11 per cent of Hong Kong-listed of China Pacific Insurance Group Co. and a 22 per cent stake in Beijing Capital International Airport Co.

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Reading Time: 2 minutes

Singapore’s sovereign wealth fund, which has recently changed its name from Government of Singapore Investment Corp. Private Ltd., said it will shift its global investment strategy to better reflect the current economic situation on the world markets and to reach higher long-term yields.

Reading Time: 2 minutes

GIC2Singapore’s sovereign wealth fund, which has recently changed its name from Government of Singapore Investment Corp. Private Ltd., said it will shift its global investment strategy to better reflect the current economic situation on the world markets and to reach higher long-term yields.

GIC will split its portfolio into one that’s actively managed, and another that tracks the overall market, it said during the presentation of its annual report on August 2, which showed steady average annual results of about 4 per cent yield over 20 years.

With active management, the $248 billion asset fund wants to achieve better results in a market it described as “complicated.”

The new investment framework explicitly isolates three drivers of GIC’s long-term performance. Firstly, the Reference Portfolio, based on a balance of 65 per cent global equity and 35 per cent bond market indices, defines the amount of risk the government is prepared to have GIC take. Secondly, the Policy Portfolio represents GIC’s asset allocation strategy to improve long-term returns compared to the passive Reference Portfolio. Third, the Active Portfolio allows the GIC management to execute skill-based and opportunistic strategies.

The report showed that equities held by GIC increased to 46 per cent in the year ended March 2013 from 45 per cent a year earlier. Bonds rose to 21 per cent from 17 per cent and it reduced cash holdings to 7 per cent from 11 per cent a year earlier.

Citigroup and UBS are the fund’s largest investments. Holdings in Europe declined to 25 per cent of its portfolio, down one percentage point from the previous year, according to the report. Those in the UK fell to 8 per cent from 9 per cent, while investments in the euro area were unchanged at 11 per cent. Assets in the Americas rose as the US increased to 36 per cent of GIC’s portfolio from 33 per cent a year earlier.

The allocation for North Asian markets was unchanged at 13 per cent of GIC’s portfolio. The region includes China, Hong Kong, South Korea and Taiwan. In China, GIC holds stakes of 40 listed Chinese companies, including  11 per cent of Hong Kong-listed of China Pacific Insurance Group Co. and a 22 per cent stake in Beijing Capital International Airport Co.

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