Singapore’s GIC reports steady returns amid inflation uncertainty

The logo of the Government of Singapore Investment Corp. (GIC)

Munshi Ahmed | Bloomberg | Getty Images

Singapore’s sovereign wealth fund GIC reported steady returns for the year but warned of “deep uncertainty” as investors face worries about inflation, pandemic risks and geopolitical challenges.

The fund’s portfolio recorded an annual nominal dollar return of 7% over a 20-year period ending March 31, 2022, GIC said in its annual report published on Wednesday.

It also achieved an annualized rolling 20-year real return of 4.2% for the period ended March 31, after stripping out inflation.

Still GIC, which is among the world’s largest investors, painted a rather gloomy picture of the global environment.

“Years of worries about deflation have turned into worries about elevated inflation, forcing economic policymakers to reverse stimulus policy,” Chief Executive Lim Chow Kiat said in the report.

“At the same time, the climate crisis clock is ticking, pandemic risk lingers, and geopolitical conflicts and domestic political schisms are growing. There are no easy choices for politicians and business leaders, and in turn for investors.”

Rising inflation

Given these uncertainties, we have doubled down on our core investment principles – diversifying our portfolio, taking the long view and emphasizing preparation rather than prediction.

As a result, the CEO said he expects portfolio diversification to be “more challenging as few assets are spared the effects of worsening inflation and slower economic growth.”

GIC said its diversified portfolio and cautious investment stance helped cushion its performance from the market correction that took place in early 2022.

“Given these uncertainties, we have doubled down on our core investment principles – diversifying our portfolio, taking the long view and emphasizing preparation rather than prediction,” Lim said in the report.

Amid the global shift to a low-carbon economy, the foundation announced that it has created a dedicated office focused on sustainability to increase focus on that front.

The new office will deepen research on critical issues and further integrate sustainability into all its investment and business processes, the GIC said as part of the release of its annual report.

Leave a Reply

Your email address will not be published.