China Investment Corp '09 Profit Reaches $41.7 Billion

Despite a tumultuous 2008, the CIC outperformed many other sovereign wealth funds following the global financial crisis -- the country's $300 billion SWF upped its net profit to $41.7 billion in 2009 from $23.1 billion in 2008.

(July 29, 2010) — China’s sovereign wealth fund reported at 11.7% return on oversees investments last year, driven partly by heightened bets on commodities to benefit from a rebound in global markets.

The 80% surge in net income brought the fund’s assets to $332.4 billion and reversed a 2.1% decline in 2008, making it the fifth largest SWF in the world.

The fund’s 2009 return was spurred by a heightened allocation to overseas investments and higher-risk assets — in its annual report released today, the CIC said it earmarked slightly more than half of its $200 billion worth of registered capital for global investments. According to the CIC, 36% of its overseas portfolio was invested in equities last year, 26% in fixed-income products, 32% was held in cash and 6% was in alternative investments, highlighting the SWF’s move toward higher-risk assets last year. In terms of geographic region, North America was the top destination for CIC’s diversified equity investments last year, accounting for 43.9%. Asia and the Pacific regions attracted 28.4%, Europe had 20.5%, Latin America had 6.3%, and Africa had 0.9%.

Despite a strong 2009, the CIC, which was set up in September 2007, has said it sees a challenging year ahead given the volatility in global markets. In May and June, the fund faced losses of about 10% as a result of growing equity market volatility from the European sovereign debt crisis.

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Separately, as China’s SWF aims to strengthen its overseas investments and looks for new government funding, the fund recently announced that it has started a new round of global hiring. The fund advertised 64 job postings, with an August 9 deadline for applications.

“Due to the needs for business development, CIC will start a new round of recruiting,” the Beijing-based fund said on its website. “We seek highly qualified professionals worldwide to join us.”

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(July 28, 2010) — Despite a tough 2009 for its reputation, the Massachusetts Pension Reserves Investment Management (MassPRIM) has emerged with strong financial results.

MassPRIM oversees the $41 billion Pension Reserves Investment Trust (PRIT), which, it has been announced, saw returns of 12.82% for the fiscal year ended June 30. This is in sharp contrast with results from the previous year, when the fund plunged 23.6%, or nearly $13 billion – its biggest loss in history. Overall, the pension gained $3.6 billion for the 2010 fiscal year.

The uptick is timed perfectly for Treasurer Timothy P. Cahill, who is running for Governor an as independent against Massachusetts Governor Deval Patrick and Republican Charles Baker.

Executive Director Karen Gershman called the fund’s latest fiscal year performance “outstanding on both an absolute and relative basis,” leaving an annualized return since inception of 9.36% — well above its return target of 8.25%. The rebound, which exceeded PRIT’s policy benchmark return of 9.77% for the year by 305 basis points, was boosted by gains of 33% for value-added fixed income, 18% for private equity, and 14% for global equity.

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As of June 30, PRIT’s portfolio was valued at $41.3 billion, up 9.5% from a year earlier.

In recent news regarding MassPRIM, despite the fund being scrutinized by the public eye earlier this year for pay-to-play regarding allegations against State Treasurer Timothy P. Cahill, Chief Investment Officer Stanley Mavromates told ai5000 that the issue is not currently an imperative topic of discussion for the fund.

New regulation by the Securities and Exchange Commission (SEC) aimed at curtailing pay-to-play practices limits political donations by investment advisers, reflecting a growing concern that such practices were causing public plans and their beneficiaries to receive subpar advisory services for excessive fees.

While MassPRIM told ai5000 that they are not currently taking action following the SEC’s decision, a variety of public pension funds, such as the California Public Employees Retirement System (CalPERS) and the New York State Common Retirement Fund, have adopted (or are working to adopt) policies limiting the use of placement agents by the investment advisers that desire to do business with such funds. Many of these public funds have provided comments to the SEC on its proposed rule.

“Since Cahill took his position as Treasurer seven years ago, we’ve been ranked in the top 10% nationally in terms of the investment performance of the fund,” Michael Travaglini, MassPRIM’s former executive director, told ai5000 in late March. “Those returns would not have been possible if we had been making decisions other than objective investment choices.”

Since Cahill took his position as Treasurer in January 2003, the fund’s value has grown from $25.9 billion to $41.3 billion.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742