Singapore sovereign wealth fund GIC Pte Ltd reported the highest annualised rolling 20-year real rate of return since 2015 in its financial year ended March 31, thanks to strong performance across asset classes, but voiced concern about the global economic outlook and high asset values.
The return was 4.3%, up from 2.7% in the financial year ended March 2020.
“It wasn’t just equities, almost all the risk assets have done really well, and even those assets which directly have negative impact from the [coronavirus] pandemic actually held up reasonably well,” GIC Chief Executive Officer Lim Chow Kiat told reporters during a virtual press conference on July 22.
He also attributed the increased reterun partly to the fact that a poor year from 21 years ago has dropped out of calculations for the rolling average.
But Lim says GIC remains cautious on the macroeconomic outlook, citing “elevated asset valuations, more fragile fundamentals in the global economy and less policy room” for policymakers to manoeuvre.
“In contrast, we are positive on the micro prospects, given new areas of growth that are driven by increasing emphasis on sustainability, accelerating technological transformation, and growing needs for businesses to reconfigure their supply chain,” he says.
GIC’s allocation to cash and bonds declined to 39% as of March 31 from 44% a year ago. The fund raised allocation to emerging-markets equities and private equity by two percentage points each to 17% and 15%, respectively, and increased exposure to real estate from 7% to 8%.
The share of its total portfolio invested in the US was unchanged at 34%, the fund’s single largest geographical exposure. But its allocation to Asia ex-Japan was increased to 26% from 20%.
GIC doesn’t publicly disclose its asset data. The Sovereign Wealth Centre estimates the wealth fund had around US$453 billion of assets as of March 2020.