Home ListingAugust 8, 2014

Manager Bonanza at CIC

The largest sovereign fund in Asia has bucked the international trend of bringing investment capability in house.

Reported by Featured Author

The China Investment Corporation (CIC) upped the level of its assets being managed by external managers by almost 20% last year, according to its 2013 annual report.

At the end of 2013, the fund had 67.2% of its $652 billion in assets farmed out to third-party managers. A year earlier, just 63.8% of its then $575 billion was managed by external companies.

The figures showed that third party firms were responsible for $71 billion more assets at the end of last year than a year earlier, taking into account the uplift in total CIC assets.

The annual report made no reference to the uplift in capital managed externally, but it notes the CIC added just 25 more staff over 2013 to take care of £77 billion more assets by the end of 2013. It had 407 staff at the end of last year.

The fund’s asset allocation in 2013 saw all its net new capital flow into equities. The allocation to public equity at the end of 2013 stood at 40.4%, equivalent to $263.7 billion, marking a $79 billion uptick from the $184.1 billion that was held in that class a year earlier.

Aside from the $77 billion in new assets, capital was taken from allocations to long-term investments—several of which Chairman and CEO Ding Xuedong said the fund had sold—cash, and absolute return strategies.

The majority of the new capital flowed into developed nation equities, but those outside the US, the report showed. The holdings in these securities almost doubled, from $51 billion at the end of 2012 to $97 billion by the end of 2013. There was just an extra $3 billion held in emerging market equities, while US equities were boosted by $31 billion.

However, in fixed income the story was different. Emerging market bonds made up just 17.5% of the CIC’s fixed income portfolio at the end of 2012; a year later, they accounted for 26.8% of the portfolio, with advanced economy bonds losing the 10 percentage point allocation.

The fund made a 9.3% return on investments in 2013.

The annual report can be found on the CIC’s website.