China Investment Corp., the Beijing-based sovereign wealth fund, reported a 10.6% gain for 2012 on its portfolio of overseas investments, rebounding from a 4.3% loss the year before.
In its latest annual report, released Friday, the CIC said its portfolio— comprising those overseas investments managed by affiliate CIC International as well as controlling stakes in key state-owned financial institutions — ended 2012 at $575.2 billion, up 19% from $482.2 billion at the end of 2011.
In an introductory message for the report, Ding Xuedong, the CIC chairman and CEO installed July 5, suggested the fund’s healthy returns for the year were in part due to dynamic asset allocation.
“Thanks to intensified market research and timely adjustment to optimize our portfolio mix, we promptly seized the window of opportunity on the back of a market turnaround in the second half of the year,” wrote Mr. Ding.
Over the past year, meanwhile, the overseas portfolio's allocation to “cash and others” plunged to 3.8% from 11% at the end of 2011, while the allocation to fixed income dropped to 19.1% from 21%.
Public equities accounted for 32% of the portfolio, up from 25% the year before, while “long-term investments” increased to 32.4% from 31% and absolute-return investments, primarily hedge funds, edged up to 12.7% from 12%.
External fund managers appeared to benefit from that tactical move into risk assets, overseeing 63.8% of the overseas portfolio by the end of 2012, up from 57% at the close of 2011.
With the latest 10.6% return, the CIC's annualized returns over the five years since it was launched improved to 5.02% from 3.8% over the first four years of its existence.
At the close of 2012, the CIC said 49.2% of its equity allocation was in U.S. equities, with another 27.8% in non-U.S. developed market equities and 23% in emerging markets equities.
For fixed income, meanwhile, 54.7% was in the sovereign bonds of advanced economies, with another 25.1% in investment-grade corporate bonds, 17.5% in the sovereign bonds of emerging markets and 2.7% in inflation-indexed bonds.