Temasek Holdings, a Singapore government-owned sovereign wealth fund, said its global investment portfolio stood at a record S$308 billion ($235 billion) as of the March 31 close of its latest fiscal year, up 12.2% from the year before.
The latest return was down slightly from Temasek's 13.4% gain for the prior fiscal year. Annualized returns for the 10- and 20-year periods through March 31, 2018, came to 5% and 7%, respectively.
At a briefing Tuesday for journalists on the fund's latest results, executives expressed caution over rising U.S.-China trade tensions, but said their base case scenario calls for the avoidance of a full-blown trade war.
Temasek is "obviously worried that this could escalate," but for now China's policymakers would seem to have the tools at their disposal to offset any fallout from trade tensions, said Michael Buchanan, head of strategy and senior managing director, portfolio strategy and risk group.
Even if those tensions don't worsen appreciably, they could still have broader negative effects by, for example, depressing corporate investment in new plant and equipment, executives said. Still, if trade tensions are likely to remain elevated, the underlying resilience of the U.S. economy should leave the U.S. Federal Reserve's rate hike schedule intact, Mr. Buchanan said.
Increasing downside risks have left Temasek "more cautious but, as always, we remain alert to attractive investment opportunities," said Sulian Tay, managing director, investment.
For the fiscal year through March 31, Temasek appeared to find no shortage of promising opportunities. The fund made a combined S$29 billion of new investments against divestments of just S$16 billion. That net investment of S$13 billion was the most since the fiscal year ended March 2008, when Temasek invested S$15 billion more than it divested.
U.S. markets and companies attracted the largest share of Temasek's new investments during the year, followed by China and Europe.
By sector, executives said Temasek since 2011 has continued to focus on "technology, life sciences, agribusiness, non-bank financial services and consumer-related companies, with their weight in the overall portfolio surging to 26% from 5% over that period. Roughly half of the S$29 billion of new investments in the most recent year were in those sectors, executives said.
Meanwhile, returns on Temasek's investments in those sectors have been more than two times the returns on the overall portfolio since 2011, said Alpin Mehta, managing director, investment.
By geography, the portfolio's investments in Singapore — calculated on a "look through" basis, which only counts the portion of a Singapore-based company's business actually conducted in Singapore — came to 27% of Temasek's portfolio, down from 29% the year before.
China edged up to 26% from 25%. The rest of Asia, North America and Europe likewise added a percentage point each, to 15%, 13% and 9%, respectively.
Australia and New Zealand dropped one point to 7%. Latin America also fell one point to 1%, while Africa, Central Asia and the Middle East held steady at 2%.
The split between listed and unlisted assets ended the fiscal year at 61% to 39%, compared with a 60/40 split at the close of the prior fiscal year. But with a more cautious outlook for listed markets now, Temasek could be looking at more private market opportunities this year, said Rohit Sipahimalani, joint head of Temasek's portfolio strategy and risk group.
While the number of big asset owners and money managers now focused on private markets is growing, Mr. Sipahimalani suggested the scale of Temasek's investment footprint in Asia could leave it better positioned to "add a lot of value to our portfolio companies" by, for example, helping U.S. and European technology companies navigate in Asia. That, he said, "gives us an edge" in avoiding auctions for attractive investment opportunities.