The Government of Singapore Investment Corporation (GIC) continues to have respectable showing with its 8 percent nominal terms and 4.5% real returns in Singapore dollars over the last 20 years.
It is taking a long term view of the situation without looking for every investment to prosper every year but for the overall portfolio to perform over a long time.
With this vision, the GIC has emerged as a big player in the world of SWFs. Some of its largest deal in 2008 includes the investment of 11 billion Swiss francs (S$14.5 billion) in the Swiss private banking giant UNS in December 2008 and its US$6.88 billion investment in Citigroup in January 2008.
Temasek has also taken a US$4.4 billion stake in Merrill Lynch December 2008 and may up its stake from 10 to 14%. It has also acquired real estates in Japan and Italy.
It is for the same reason that another sovereign fund, China, primarily invests its US$1.8 trillion in currency reserves in low-yielding US government debt, setting up the CIC in 2007 to put about US$200 billion into assets with higher rates of return such as stocks and corporate bonds.
Bloomberg, “Chinese SWF has no confidence in financial firms” dated 4 December 2008 (Singapore: Today), 2008, p. B6.
Chia, Sue-Ann, “GIC’s financial showing has been ‘respectable’” dated 6 December 2008 (Singapore: Straits Times), 2008, p. B7.
Straits Times, “GIC top player in biggest deals by sovereign wealth funds” dated 5 September 2008 in the Straits Times, (Singapore: Straits Times), 2008, p. B35.