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GIC increases real estate exposure

The sovereign wealth fund of Singapore looks to alternative assets, including real estate, private equity and infrastructure, to mitigate against further losses after its portfolio shrink by more than one fifth in the past year.

GIC, the sovereign wealth fund of Singapore increased its exposure to real estate by 2 percent for the year ended 31 March, as part of a wider push to increase its alternative assets under management.
In its annual report 2008/2009, the $200 billion state fund said its overall portfolio had shrunk by more than a fifth, but that it had recovered more than half its losses incurred during the previous year. In all, GIC's portfolio shrank by more than 20 percent in the year to March.
To mitigate against further potential losses, GIC said it had lifted its exposure to alternative assets inlcuding, real estate, private equity and infrastructure, from 23 percent in the year up to March 2008, to 30 percent in the year up to 31 March 2009.

As part of this increase, GIC lifted its exposure to real estate from 10 percent to 12 percent, and in private equity from 8 percent to 11 percent.
GIC said it had reduced its investments in public equities by more than 10 percent from July 2007 to September 2008 due to concerns of overvaluation in the sector. But, it said it would favour investments in emerging markets such as those in Asia, going forward.
“Global economic growth will be higher in the emerging than the developed economies. The developed economies will undergo further deleveraging while the emerging economies will be compelled to engender domestic demand,” said Ng Kok Sag, chief investment officer at GIC.
GIC Real Estate has tradtionally invested in private real estate, REITs, real estate debt and in real estate funds. The investor has also tradtionally invested across the real estate sectors.