Government of Singapore Investment Corp., which manages more than US$100 billion, will be able to more quickly adjust the makeup of its assets and will focus on emerging markets as they outpace developed economies.
The fund, with the approval of the board, will be free to change its asset allocation over the medium term, or within five years, to “respond more flexibly to significant risks or opportunities,” Chief Investment Officer Ng Kok Song said in the annual report Sept. 26.
The Singapore GIC said it will continue to increase its investments in higher-growth emerging economies, especially in Asia, as expansion in developed nations slows. Its holdings in the U.S. fell to 36% of its portfolio in the year ended March 31, from 38% the previous year, according to the annual report.
The fund, established in 1981, said annual returns in the past 20 years averaged 7.1% in U.S. dollar terms, compared with 5.7% in the previous fiscal year. The rate of return in excess of global inflation rose to 3.8% from 2.6%. GIC didn't give the value of its assets or how much they rose or fell.
The 20-year annualized return at Temasek Holdings, the city-state's other investment firm, was 14% in the 12 months ended March 31. Temasek manages US$137 billion.
“While the global economy is experiencing a rebound, the recovery path beyond this year is subject to significant uncertainties,” GIC Deputy Chairman Tony Tan said in the report. “The financial landscape has become more volatile, with more uncertainty and tail risk.”
Sovereign risks have increased especially in Europe and asset price bubbles could be threats in emerging markets, Mr. Tan said in the report. There also is a risk that the developed world will swing toward protectionism, he said.