Singapore’s sovereign wealth fund company, GIC, revealed that its rolling annualised 20-year rate of return is 4.9% in 2014. GIC also said that it has more than S$300 billion of fund under its management, while Temasek Holdings just have S$266 billion.
In an interview with the Financial Times, GIC’s chief investment office, Lim Chow Kiat, said that the GIC expects low returns for the next decade because markets have advanced ahead of the real economy and that the GIC will actively seek off-market bespoke investments.
“The thing is to be more active in providing financing for idiosyncratic opportunities and not relying on the market to take prices higher. [Lower returns] mean we are more willing to provide solutions than taking pre-packaged ones.”
29% of GIC’s portfolio is invested in equities from developed markets, while 18% is in equities from emerging markets. The rest are in bonds, cash, real estate and private equity. Overall geographically, GIC has invested 43% in Americas, 30% in Asia and Europe and Australasia at 2%.
GIC’s chairman is Prime Minister Lee Hsien Loong, after his father Lee Kuan Yew stepped down in May 2011. Prime Minister Lee Hsien Loong’s wife is the CEO of the other sovereign wealth fund company, Temasek Holdings. The CPF Ordinary Account interest rate is fixed at 2.5%, while the returns of the two sovereign wealth fund companies which use these CPF funds range between 4.9% to 16% since inception.
The current Minimum Sum is at S$161,000, and increases by around 4 to 6% yearly. Singaporeans are not able to rely on their CPF for retirement and would have to continue working after the legislated retirement age of 67. The Singapore Government plan to increase the retirement age to 71 because people are “living longer”.