<!-- Swiftype Variables -->

Sovereign Wealth Funds

China Investment Corp. reports ‘satisfactory’ 2016 with 6.22% overseas return

China Investment Corp. on Tuesday reported a 6.22% investment gain on its overseas investments for 2016, rebounding from a 2.96% decline the year before.

The Beijing-based sovereign wealth fund didn't offer details regarding how much of its $813.5 billion in total assets those overseas investments accounted for.

Following what Tu Guangshao, CIC's vice chairman and president, described in a statement in the fund's annual report as "an extraordinary year for CIC," the value of its investment portfolio ended the year down marginally from $813.8 billion at the close of 2015.

Another measure of CIC's growth — "the annualized growth rate of state-owned capital" — slipped to 14.08% for the 9-year-old fund, from 15.3% the year before.

Total portfolio assets were largely unchanged despite reported investment income of $83 billion for the latest year, up from $76.7 billion for the previous year.

A CIC spokesman couldn't immediately be reached for comment, and the fund didn't immediately respond to emailed questions.

CIC is composed of three main entities, of which two oversee overseas investments: CIC International, which handles financial investments in publicly listed stocks and bonds, hedge funds, multiasset, real estate and private equity fund investments, and CIC Capital, which focuses on direct private markets investments. The third entity, Central Huijin Investment Co., holds significant stakes — most from 30% to 70% — in key domestic financial institutions.

The annual report said CIC's investment team proved equal to the challenges of a low-growth, high-volatility global backdrop for the latest year.

"Against the backdrop of complex and fluid situations at home and abroad, CIC managed its investment actively and prudently, and was able to achieve satisfactory results," the report said.

In part, that reflected a continued push to boost CIC's private markets investments.

Ding Xuedong, CIC's outgoing chairman and CEO, in his annual report message, said "given the falling returns and aggregating investment risks, a rational response and sustainable approach for CIC would be to diversify away from the public market's stocks and bonds and grow our alternative investments."

By the end of 2016, private market investments had grown to 37.2% of CIC's portfolio, up from 34.8% the year before.

Publicly listed equities, meanwhile, slipped to 45.9% from 47.5%, and fixed income edged up to 15% from 14.4%. Cash dropped to 1.9% from 3.3%.

By geographic region, the fund ended 2016 with relatively light exposure to emerging markets — a segment of the global opportunity set that has drawn growing inflows in 2017 year-to-date.

Emerging markets accounted for 11% of CIC's publicly listed equity allocations, down from 11.7% the year before and 21% in 2014, and a mere 3.6% of its fixed-income allocations, down from 5.1% in 2015 and 18% in 2014.