Singapore’s Sovereign Wealth Fund Posts 6.9% 20-Year Return

Singapore’s sovereign wealth fund, GIC, reported a 6.9% annualized return for the 20-year period that ended March 31. The fund also reported five- and 10-year annualized nominal returns of 3.7% and 5.1%, respectively.

According to GIC Private Ltd., a private company owned by the Government of Singapore, the five-year return was affected by a slowdown in the global economy from the end of fiscal year 2021–22 into fiscal year 2022–23, despite a slight recovery toward the end of the latter.

The fund also reported a 20-year real return of 4.6%, up 0.4% from the same report last year. The real return means the portfolio generated a return averaging 4.6% per year above global inflation over a 20-year period.

“In an era of continued uncertainty, increasing the resilience of the GIC Portfolio is a key focus,” a release from the fund stated. “GIC has raised liquidity and focused on finding investment opportunities with stable long-term returns, including investments in real estate and infrastructure to protect the portfolio from inflation.”

As of March 31, the sovereign wealth fund had an asset allocation of 34% in nominal bonds and cash, 17% in private equity, 17% in emerging market equities, 13% in real estate, 13% in developed market equities and 6% in inflation-linked bonds.

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Compared with the same time last year, the fund cut its allocation to bonds and cash by three percentage points from 37% and raised its allocation to real estate by the same amount from 10%. It also raised its allocation to emerging market equities by one percentage point from 16% and reduced its developed market equities by one percentage point from 14%. The fund left its private equity and inflation-linked bond allocations unchanged.

“This is in line with the Policy Portfolio adopted in 2013, where we continue to gradually increase the share of private equity and real estate, aided by robust deal activity and strong asset performance,” GIC’s annual report stated.

On a geographic basis, the sovereign wealth fund had 38% of its holdings invested in the U.S., 23% in Asia (excluding Japan), 11% in global, 9% in the euro zone, 6% in Japan, 5% in the Middle East, Africa and the rest of Europe, 4% in the U.K. and 4% in Latin America.