GIC Private Ltd., Singapore’s government-owned investment fund, reported a 20-year annualized return rate of 3.9% on Wednesday, a 0.7% decline from last year, when the fund reported a 20-year return rate of 4.6%.
The sovereign wealth fund does not publicize its annual returns, but instead releases a rolling 20-year real rate of return, the fund’s primary metric for evaluating its investment performance.
For the 20-year period from April 1, 2004, through March 31, 2024, the fund reported an annualized nominal return of its U.S. dollar-denominated portfolio as 5.8%. Adjusted for global inflation, it reported a real rate of return of 3.9%. In 2023, the fund announced a 6.9% 20-year return before adjusting for inflation.
A decline in the fund’s rolling 20-year return is likely due to the 20-year measurement window dropping fiscal year 2004, which ended on March 31, 2004 and was a stronger year of returns, with a rolling return of 5.1%.
“Even though the rolling 20-year real rate of return is intended to measure returns over the long term, it can still reflect a significant cyclical element,” GIC officials wrote in an investment report. “This is particularly evident when the cycles are very pronounced at the start or end of the 20-year window.”
As of March 31, 2024, the fund had allocated 32% of its assets to nominal bonds and cash, 18% to private equity, 17% to emerging markets equity, 13% to each developed market equities and real estate and 7% to inflation-linked bonds. The fund has an estimated $770 billion in assets under management.
From 2023 to 2024, the fund decreased its allocations to nominal bonds and cash to 32% from 34% and increased its allocation to inflation-linked bonds to 7% from 6% in order to add more resilience to inflation. Private equity also increased to 18% from 17%. Continued diversification is an important goal for the GIC.
“We do not just diversify across different asset classes, which most investors do,” said Lim Chow Kiat, the GIC’s CEO, in an investment letter. “We are able to diversify with far more granularity, particularly in private markets, because of the capabilities we have built up over many years.”
As an example, Kiat pointed to real estate. The fund has made various investments in subsectors across the asset class in various geographies, including investments in data centers, student housing and logistics. “These exposures have helped the total portfolio weather the recent sharp rise in interest rates as well as the sharp shift in U.S. commercial real estate,” he wrote.
The GIC’s portfolio is also globally diversified, with 39% of the fund’s assets based in North America, another 22% in Asia excluding Japan; 10% in the eurozone, 5% in the U.K. and 5% spread across the Middle East, North Africa and the rest of Europe. Approximately 4% of the fund’s assets are invested in each of South America and Japan.
“Investors are now in uncertain terrain and must rely on their purpose and unique strengths,” said Kiat in a statement. “In GIC’s case, our purpose—to preserve and enhance Singapore’s foreign reserves for the long term—means staying disciplined and diversified.”
The fund sees great potential in providing green climate-tech companies with long-term flexible capital. The fund noted that in 2023, a tough macro environment led to a 30% decline in venture and growth investment for climate-tech companies.
Kiat noted that these companies are often too mature for venture and growth equity investments, but often cannot obtain infrastructure financing from investors. To meet the demand for capital, GIC’s sustainability solutions group launched an investment program to bridge the funding gap for energy transition assets.
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Tags: GIC, GIC Private Limited, Lim Chow Kiat, Singapore, Sovereign Wealth Fund