SINGAPORE: In trying to lower risks, Singapore’s sovereign wealth fund GIC ended up missing out on some investment returns in recent years, Senior Minister of State for Finance Jeffrey Siow said in parliament on Monday (Jan 12).
But he said the decision to de-risk was a “matter of judgment”, and that the fund has met the government’s expectations.
Addressing several parliamentary and supplementary questions on GIC’s investment performance, Mr Siow said the fund expected increased market volatility and saw that valuations were heightened, so it took pre-emptive measures to moderate its risk exposure.
The measures, which were taken in recent years, were intended to keep the portfolio risks within acceptable limits, and to guard against the possibility of “significant asset impairment” if markets fell sharply.
“But as equity markets have continued to remain elevated, these prudent de-risking measures resulted in some foregone returns,” said Mr Siow.
GIC’s annual return has lagged behind its reference portfolio by 0.5 and 1.3 percentage points over 20 and 10 years, respectively, the Financial Times reported in December.
The fund’s reference portfolio comprises 65 per cent global equities and 35 per cent global bonds.
Over five years, FT said the GIC portfolio lags its reference by 3.1 percentage points.