highlights of gic annual report 2014/2015

Download Highlights of GIC Annual Report 2014/2015

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  2. 2. Primary Performance Metric Primary metric to evaluate investment performance is the rolling 20-year real rate of return for our total portfolio comprising thousands of investments globally Reflects our mandate to preserve and enhance the international purchasing power of the reserves placed under our management over the long term Assessed by our long-term performance on a total portfolio basis
  3. 3. Sustained delivery of steady long-term returns on Singapores foreign reserves over 20 years A more difficult future investment environment with lower broad market returns and higher volatility GIC will keep to its patient orientation and continue to take advantage of short-term price volatility in order to generate good real returns over the long term Executive Summary
  4. 4. GICs annualised real rate of return was 4.9% per year, over 20 years ending 31 March 2015. This level of returns is not expected to continue, with current high asset prices likely to result in low returns over the next 5 to 10 years. The results underlie the point that to benefit from long-term investing, we have to be prepared to tolerate short-term unrealised losses. Key Highlights
  5. 5. 0 1 2 3 4 5 6 7 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 % 4.9%return above global inflation per year over 20 years Sustained steady long-term investment returns on Singapores foreign reserves *For period ended 31 March 2015 Steady Long-Term Performance
  6. 6. Annualised nominal return (USD)* Annualised volatility*Time Period GIC Portfolio Reference Portfolio GIC Portfolio Reference Portfolio 20-year 10-year 5-year 6.5% 6.3% 6.1% 7.2% 6.1% 6.9% 9.0% 10.0% 9.0% 10.3% 11.7% 10.8% *For period ended 31 March 2015 Steady Long-Term Performance GIC Portfolio consistently less risky than Reference Portfolio Designed to be resilient; has better risk characteristics than the Reference Portfolio as it is diversified across multiple asset classes.
  7. 7. 0.00 0.05 0.10 0.15 0.20 -25 -20 -15 -10 -5 0 5 10 15 20 25 Probability Density Simulated Annualised Returns (%) Distribution of simulated 5- and 20-year annualised real returns of the Reference Portfolio 5-year Annualised Returns 20-year Annualised Returns Prospects of Investment Returns Benefitting from long-term investing approach
  8. 8. REFERENCE PORTFOLIO Passive alternative portfolio; set at 65% global equities; 35% global bonds Consistent with the Clients Risk Tolerance + = Allocation among 6 core asset classes Key driver of returns over the long term Approved by GIC Board Comprises overlay of alpha (i.e. active, skill-based strategies) Adopted by GIC management Overseen by GIC Investment Board Represents actual exposures of GIC portfolio Within risk limits set by the Client Investment Framework Investment framework sets out responsibilities across GIC
  9. 9. 31 March 2015 (%) 31 March 2014 (%)Asset Mix Developed Markets Equities Emerging Markets Equities Nominal Bonds & Cash Inflation-linked Bonds Real Estate Private Equity 100 100TOTAL 29 29 18 32 5 7 9 19 31 5 7 9 Investing in a mix of growth and defensive assets *As of 31 March 2015 Portfolio Composition
  10. 10. 43% 25% 30% AMERICAS EUROPE ASIA 2%AUSTRALASIA Broad geographical distribution *As of 31 March 2015 Portfolio Composition
  11. 11. 31 March 2015 (%) 31 March 2014 (%)Geographical Distribution Americas Europe Asia Australasia 100 100TOTAL United States Latin America Others Others Eurozone United Kingdom Others North Asia Japan 34 3 6 43 7 12 6 25 10 15 5 30 2 2 34 4 4 42 8 14 7 29 10 14 3 27 2 2 Geographical distribution *As of 31 March 2015 Portfolio Composition
  12. 12. Developed Market equities Emerging Market Equities Nominal bonds & cash Inflation-linked Bonds Real Estate Private Equity 20% - 30% 15%-20% GIC Board approves allocation among our 6 asset classes Asset Class Highlight 4%-6% 25%-30% 9%-13% 11%-15%
  13. 13. Benefits of Real Estate investing Enables diversification Provides inflation hedging benefits for the GIC Portfolio Enables a long-term investor such as GIC to reap an illiquidity premium, given our ability to ride out short-term volatility and market cycles Asset Class Highlight: Real Estate
  14. 14. Our approach to Real Estate We invest across the capital structure of real estate, in both the public and private markets, allowing us to seek out the best risk-adjusted returns at any time in the market cycle. We believe in developing long-term partnerships with our global network of established and best-in-class partners, which gives us an edge in access to opportunities and execution. We invest across all major property sectors, including office, retail, hospitality, residential, industrial and student accommodation. We invest with boots on the ground to keep a closer watch on changing market conditions. Asset Class Highlight: Real Estate
  15. 15. San Francisco Mumbai Singapore Tokyo Seoul Shanghai London New York Sao Paulo One of the largest & more established Real Estate investors globally: Started cross-border investing in real estate before most other players; substantial presence in emerging markets, especially in Asia Local teams spread over 9 offices on 4 continents Real estate portfolio of direct and indirect investments with more than 350 investments in over 40 countries Asset Class Highlight: Real Estate
  16. 16. Queen Victoria Building, Sydney Iglu Portfolio, AustraliaGLP Tokyo II, TokyoShenyang Vanke City, Shenyang, China Time Warner Center, NYC Bluewater, UK Shiodome City Center, Tokyo Westin, Paris Snapshot: Global Portfolio of Real Estate Assets
  17. 17. Connect with us on LinkedIn at https://www.linkedin.com/company/gic for updates on our investment news, corporate initiatives and insight into our company culture, or find out more at www.gic.com.sg. GIC accepts no liability whatsoever for your actions or the actions of third parties in relation to your use of or re-distribution of these slides. Images herein may depict objects or elements that are protected by third-party copyright, trademarks and other intellectual property rights. GIC 2015. All rights reserved.


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