China Investment Corp. is looking for more resilient assets in markets battered by the coronavirus pandemic as the nation's $941 billion sovereign wealth fund seeks to boost long-term returns, Executive Vice President Zhao Haiying said.
The Beijing-based company added to its investments in credit markets in recent months, especially investment-grade loans in the U.S., after the Federal Reserve eased a liquidity crunch, Ms. Zhao said May 23 in an interview. CIC, as the fund is known, also bolstered holdings in health-care and information technology stocks and added exposure in regions such as Asia, where there was "less uncertainty" about the spread of the virus, she said.
CIC, led by Chairman Peng Chun, is fine-tuning its investment strategies. It sees a diversified portfolio as the best way to weather its biggest test since inception in 2007. A plan to boost alternative and direct investments to 50% of global assets by the end of 2022 remains unchanged, with the private portfolio, which includes real estate and private equity, avoiding any "serious damage" even as cash flows slow, Ms. Zhao said.
"As a long-term investor, we want to invest in growth," Ms. Zhao said in Beijing. "Given the many external shocks, you need to be more focused on the more resilient areas, strategies and themes, and avoid fragile areas."
CIC's overseas investments returned about 17% last year based on unaudited results, she said, as global stocks rallied. That comes close to a record 17.6% gain in 2017 and reverses a loss in 2018 when equities tumbled.
The pandemic and the collapse in global oil markets have caused more serious disruptions to other sovereign wealth funds. Norway, for example, is planning to draw a record 382 billion Norwegian kroner ($38.2 billion) from its wealth fund, forcing the world's largest sovereign investor to embark on a historic asset sale to generate cash.