GIC reports marginal RE exposure increase

In its annual report for the year 2010/2011, the Government of Singapore Investment Corporation said its exposure to real estate had increased from 9 percent to 10 percent over the year, nudging the sovereign wealth fund’s alternative assets up 1 percent to 26 percent of total assets.

The Government of Singapore Investment Corporation, Singapore’s preeminent sovereign wealth fund, has reported an increase in exposure to real estate by 1 percent in the year to 31 March.

In its annual report released yesterday, the sovereign wealth fund, which according to PERE Connect manages approximately $300 billion in total assets, said the percentage increase in its real estate holdings also nudged up its exposure to alternative assets to 26 percent of the total.

The small increase in real estate and subsequently alternative assets signalled a slight clawing back towards the 30 percent level reported two years ago. Its percentage fall last year came as a result of falling real estate and private equity valuations coinciding with an increase in the value of the fund’s equities, particularly developed market equities, which rebounded more strongly following the start of the global financial crisis.

This year however, GIC’s developed market equities exposure decreased by 7 percent to 34 percent, while its holdings in emerging markets increased 5 percent to 15 percent as the fund took active steps to become more active in Asia and Latin America.

Ng Kok Song, GICs group president, underlined the current uncertainty surrounding the recover of the world’s developed markets, adding that was one factor behind increasing the fund’s activities in Asia. He said: “The developed economies, in particular the United States and Europe, are recovering from the global financial crisis. However their longer term outlook is still uncertain and carries considerable macro financial and economic risks.

He added: “We further increased our investments in the emerging market economies on the strength of their potentially higher returns and improved macroeconomic fundamentals.”

Overall, GIC reported the value of its overall portfolio had increased in the financial year to 3.9 percent, , above global inflation, up from 3.8 percent the previous year. Its average rate of return from its investments for the 20 years to 31 March rose to 7.2 percent, up from 7.1 percent reported last year.

GIC also published for the first time this year, in the year of its 30th anniversary, its return over 5 years which stood at 6.3 percent, net of costs and fees incurred in the management of the portfolio.

Ng Kok Song also said GIC had expanded the number of countries and range of investment instruments it was using and that the fund had ‘steadfastly been investing with a long-term perspective’ and had introduced more flexibility into its portfolio ‘to respond more nimbly to significant shocks and market discontinuity’.

Earlier this summer, GIC underwent significant change at senior management level. In its real estate business, GIC Real Estate, former Tishman Speyer and Ascendas executive Goh Kok Huat was appointed as president, replacing long-term incumbent Dr Seek Ngee Huat. He started work this month.