Is an investment loss considered a draw on Past Reserves?

No, an investment loss does not constitute a draw on Past Reserves, as long as the disposal of the investment is done at fair market value.

The Reserves protection framework aims to prevent any form of sale that is deliberately carried out at below fair market value, e.g. by avoiding the need to seek explicit approval for a draw on reserves.

When any bona fide investment decision is made, there is expectation of a gain. However, no large investor is able to avoid taking some losses in investments after they are made, as investments carry some element of risk.

After an investment is made, any losses arising from its sale at fair market value do not constitute a draw on Past Reserves. Similarly, mark to market losses (i.e. falls in the market value of investments that are still being held) are also not considered a draw on Past Reserves.

The issue of whether the investment of the reserves results in gains or losses over time is therefore distinct from the question of whether there is a draw on Past Reserves.

Whether the entities which manage the reserves are making a gain or loss has to be evaluated based on changes in their overall portfolio values rather than by how much they have made or lost on individual investments. Further, we have to look at how they have performed over the long term, rather than over the short term where their performances would be influenced by the immediate market cycle. (See also question on "How have GIC and Temasek performed? What information is available on their investment returns? ")