GIC boosts cash exposure, warns of global volatility

GIC Group President Siong Guan Lim noted in his overview to the fund's annual report that global markets have experienced considerable turbulence in the last year and that uncertainty is likely to continue.

The sovereign wealth fund, which is said to have more than $300 billion under management, contrary to official claims of $100 billion, almost quadrupled the cash component of its portfolio to 11% from 3% a year earlier. Public equities exposure fell from 49% to 45%, with developed markets accounting for the entire retraction, while the allocation to nominal bonds was at 15%, compared to 20% in 2010-2011.

Private equity and infrastructure exposure rose by one percentage point to 11%, having remained consistent for the previous two years. Allocations to real estate, hedge funds and natural resources were unchanged, putting the alternatives share of GIC's portfolio at 27%.

China Investment Corp. (CIC), which published its 2011 annual report last week, doubled its exposure to private equity, direct investments and hedge funds to 43%, while paring allocations to public equities and fixed income.

In geographical terms, the Asia weighting of GIC's portfolio - specifically Japan, South Korea and Greater China - rose to 29% from 27% at the expense of the euro zone and other countries in continental Europe. While Kok Song Ng, the fund's chief investment officer, painted a bleak picture of debt-deleveraging in Europe and the threats to a fragile economic recovery in the US, he also noted that growth in emerging economies is slowing.

"A cyclical slowdown in China is necessary for its economy to consolidate to a more sustainable growth trajectory," Ng said. "But this slowdown coincides with the problems in the developed economies. It will thus weaken global business confidence and also impact the commodity-producers."

GIC's annual returns on investment for the 20 years to March 2012 - once global inflation is factored in - came to 3.9%, the same as last year.

 

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• Topics
• Southeast Asia
• Performance
• LPs
• GIC Private
• Sovereign wealth fund
• Singapore
• CIC