How have GIC and Temasek performed? What information is available on their investment returns?
GIC's mandate is to achieve good long-term returns, to preserve and enhance the international purchasing power of Government reserves.
GIC publishes an annual report on the performance of the Government's portfolio. The information below is extracted from its latest annual report (Report on the Management of the Government's Portfolio for the Year 2021/22).
GIC's mandate to achieve good long-term returns above global inflation is represented by the primary metric for evaluating GIC's investment performance the rolling 20-year real rate of return. Over the 20-year period that ended 31 March 2022, the GIC Portfolio generated an annualised real return of 4.2%. The 20-year annualised real rate of return metric is the key focus for GIC, which matches its mandate and investment horizon. A 20-year period is appropriate as it spans a few business cycles and hence encompasses a number of market peaks and troughs.
GIC also discloses the nominal rates of return over 5-year, 10-year and 20-year periods. These time frames give a sense of the ongoing performance of the portfolio. The 5-year and 10-year rates of return serve as intermediate markers of GIC's longer term investment performance.
Table 1 below shows the portfolio's annualised nominal rates of return over the 5-year, 10-year and 20-year periods in USD terms and the corresponding portfolio volatility.
Table 1: Nominal Annualized Return and Volatility of the GIC Portfolio (in USD, for periods ending 31 March 2022)
Over the 20-year and 10-year periods ending March 2022, the GIC Portfolio returned 7.0% and 6.4% per annum in nominal USD terms, in line with the broader asset markets.Over the 5-year period, the GIC Portfolio return was 8.8%. This return was more pronounced due to the greater weight of the strong market recovery in FY2020/21.
Over the 5-year period, the GIC Portfolio return was 7.7%, boosted by the strong market recovery in FY2020/21 and early FY2021/22, despite the corrections towards the end of FY2021/22.
GIC also monitors the performance of a Reference Portfolio which comprises 65% global equities and 35% bonds. The Reference Portfolio is not a performance benchmark for the GIC Portfolio, but serves as a reference for its portfolio risk. It also does not include adjustments for costs that would be incurred when investing.
Table 2 below shows the Reference Portfolios annualised nominal rates of return over the 5-year, 10-year and 20-year periods in USD terms and the corresponding portfolio volatility.
Table 2: Nominal Annualized Return and Volatility of the Reference Portfolio (in USD, for periods ending 31 March 2022)
Over the three time periods, and particularly over the last five years, the GIC Portfolio had lower volatility than the Reference Portfolio due to its diversified asset composition and pre-emptive measures to lower portfolio risk. Despite this lower risk exposure than the Reference Portfolio, the GIC Portfolio has performed creditably over a 20-year period.
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Temasek's aim is to maximise shareholder value over the long term. A significant portion of Temaseks portfolio is invested in Singapore. However, since 2002, Temasek has taken active steps to invest in Asia and other markets.
Temasek publishes an annual report that discloses its annual portfolio value as well as its performance returns Total Shareholder Returns (by Market Value) over the last 1 year, 10 years, 20 years, 30 years, 40 years and since inception.
Temaseks financial performance is scrutinised by bond rating agencies, which have given it AAA rating. Temaseks financial statements are audited by an international audit firm. (Its 2022 statements were audited by KPMG.)
Temaseks Total Shareholder Returns (by Market Value) as at 31 March 2022 are shown in the chart below.
More information on Temasek's performance can be found in the Temasek Review 2022 (See online version here ).
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