The Government of Singapore Investment Corp. (GIC), one of two sovereign wealth funds of Singapore, said Tuesday that its investments fell more than 20 percent in the year that ended in March, but recovered more than half that loss during the rally on financial markets since then.
The fund’s portfolio shrank by more than a fifth in the year that ended March 31, but it has ridden the financial meltdown better than its sister fund Temasek by paring its exposure to equities before the crisis and through a well-timed sale of part of its Citigroup holding.
G.I.C., headed by Lee Kuan Yew, the former prime minister, is the largest sovereign fund in the world after those of Abu Dhabi, Saudi Arabia and Norway, according to Deutsche Bank.
The fund says it manages more than $100 billion; analysts estimate the figure at $200 billion to $300 billion.
In its annual report, G.I.C. said its investment in UBS was still showing a loss. This month, it said it had made a $1.6 billion profit from halving its stake in Citigroup.
GIC last week pared its shareholdings in Citigroup to less than 5 per cent from more than 9 percent, realising a $1.6 billion profit.
Its investment in UBS will ''take longer to recover,'' GIC said in its annual report. The company said both investments have recovered ''significantly''. It did not take part in the recent placement of 6 billion Swiss franc ($6.6 billion) of UBS shares sold by the Swiss Government.
G.I.C.’s annual performance and subsequent recovery resemble that of Temasek, which said this month that its portfolio slumped by 55 billion Singaporean dollars, or $38.8 billion, in the year that ended in March, a 30 percent decline, before recouping most of its losses.
The US is home to as much as 38 per cent of GIC's assets. Europe accounts for as much as 29 per cent and Japan as much as 11 per cent, GIC said. In the fiscal year ended March 31, 2008, its US investments were 34 per cent, while European investments were 35 per cent.
GIC's investments in stocks dropped to 38 per cent, from 44 per cent the previous fiscal year, according to the report. It increased its allocations to alternative investments to 30 per cent from 23 per cent in the year ended March 31, 2008. Its cash holding rose to 8 per cent, from 7 per cent. Bond investments fell to 24 per cent of its portfolio, from 26 per cent the previous year.
The company said it cut public equities by more than 10 per cent between July 2007 and September 2008, helping it avert a larger loss. It bought back the equities at the start of the year to restore its portfolio's public equities to its pre-crisis levels.
Forbes, Singapore Fund Looks To Recoup Losses, 29 Sept 2009, http://www.forbes.com/2009/09/29/singapore-gic-investment-markets-equity...
Brisbane Daily, Singapore loses out as UBS stumbles, 30 Sept 2009, http://www.brisbanetimes.com.au/business/singapore-loses-out-as-ubs-stum...
New York Times, Singapore Wealth Fund Says Investments Fell 20% in Year, 29 Sept 2009, http://www.nytimes.com/2009/09/30/business/global/30fund.html