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GIC’s performance on par with Norway’s sovereign wealth fund: analyst – Channel News Asia

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GIC’s performance on par with Norway’s sovereign wealth fund: analyst – Channel News Asia

GIC's performance on par with Norway's sovereign wealth fundSINGAPORE: GIC has reported a 20-year annualised real return of four per cent last year, compared to 3.9 per cent in the previous year. These are returns on the foreign reserves of the Singapore government.

Investment analytics firm HedgeSpa estimates that the GIC policy portfolio returned 14 per cent in the fiscal year ended March 2013 — that is on par with the 13.4 per cent return made by Norway’s Government Pension Fund, the world’s largest sovereign wealth fund.

Starting from April 2013, GIC has also implemented a new investment framework to manage its portfolio.

GIC is anticipating a more challenging and complex investment environment ahead. It is therefore positioning its portfolio to focus on key asset classes that generate returns over the long term, but may be more risky or illiquid in the short term.

Passive investing aims to largely mirror the returns of a market, usually through an index-tracking fund. On the other hand, active investing includes picking assets that outperform the market, and buying and selling more or less of certain assets.

GIC’s new framework consists of an “active portfolio” of skill-based strategies which aims to outperform the policy portfolio. This active portfolio is limited by an undisclosed risk budget set by the GIC board, and is overseen by a separate investment board that has been created.

Bernard Lee, CEO of HedgeSpa, said: “This type of framework has been adopted by a lot of international, large investment houses for more than a decade… Sometimes, when you’re in a commercial setting, you cannot tell your investor exactly what you’re doing but they need some kind of assurance that you’re doing the right thing.”

Starting this year, GIC has also simplified its policy portfolio from 13 to six asset classes, including public equities, private equity, real estate, bonds and cash.

According to the Sovereign Wealth Fund Institute, Norway’s Government Pension Fund Global — which is almost entirely invested in publicly traded securities — is the world’s largest sovereign fund.

GIC is ranked eighth in terms of assets. Its assets are estimated by the Sovereign Wealth Fund Institute to be worth US$ 247.5 billion. GIC said it invests over US$ 100 billion in assets in over 40 countries.

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