Singapore’s multibillion-dollar sovereign wealth fund GIC yesterday reported a substantial dip in returns and warned of “difficult” global investment conditions over the next decade.
The fund said in a statement its annualized rate of return, excluding global inflation, for the past 20 years fell to 4 percent in the year to March, from 4.9 percent last year, adding that future returns would be challenged by uncertainties caused by a low-yield environment.
“These difficult investment conditions can stretch for the next 10 years,” deputy group president and chief investment officer Lim Chow Kiat (林昭傑) said.
“GIC is prepared for this protracted period of all-time low interest rates, modest global growth prospects and high valuations of financial assets,” he added.
In the face of a global slowdown, most central banks around the world — with the notable exception of the US Federal Reserve — have cut or are considering cutting borrowing costs, as they look to ramp up inflation and kickstart their economies.
GIC, formerly known as the Government of Singapore Investment Corp, manages Singapore’s foreign reserves with a focus on long-term performance.
It does not disclose the exact value of its portfolio, saying only that it has “well over US$100 billion of assets” in more than 40 countries, including real estate, equities and fixed-income investments.
The US-based Sovereign Wealth Fund Institute says GIC has US$344 billion of assets under management, making it the world’s eighth-largest.
GIC says 34 percent of its portfolio is in the US, 20 percent in Asia excluding Japan and 11 percent in Japan.
Singapore’s other global investment company, Temasek Holdings Pte, this month said its global portfolio suffered its first annual drop since 2009 at the height of the global financial crisis.
Temasek announced that the value of its global assets was S$242 billion (US$180 billion) by March, down 9 percent from last year’s record S$266 billion.
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