Singapore's GIC reported its lowest 20-year inflation-adjusted returns — the sovereign wealth fund's barometer of choice for long-term investment skill — since the global financial crisis.
The 2.7% annualized real return was a "resilient" outcome in "extraordinary times," Lim Chow Kiat, CEO, said in the fund's annual report for the fiscal year ended March 31, published Tuesday.
The latest figure is down from 3.4% for the 20 years through March 31, 2019 — in part, the report said, because a "very strong tech-bubble" gain for the year ended March 2000 dropped out of the 20-year window.
But it still came in just above the 2.6% annual gain for the period through March 31, 2009, the year that saw the worst of the market fallout from the global financial crisis.
GIC "pre-emptively derisked" last year, shifting allocations to cash from equities, out of concern about "high asset prices, weakening fundamentals, limited policy room and growing geopolitical uncertainties," Mr. Lim said.
Asset allocation figures as of March 31 show GIC's portfolio remains defensively positioned — with a 44% allocation to nominal bonds and cash, up from 39% the year before and even further above the GIC reference portfolio's 30% ceiling for the asset class.
The weight of developed market equities in the portfolio, meanwhile, slipped to 15% from 19% the year before, 23% the year before that and 27% as of March 2017.
The latest allocation is 5 percentage points below the bottom of the reference portfolio's 20% to 30% target range for developed market equities.
Elsewhere, GIC's March 31 allocations to emerging markets equities slipped to 15%, down from 18% the year before, while private equity and inflation-linked bonds rose 1 percentage point each to 13% and 6%, respectively, and real estate held steady at 7%.
The defensive positioning GIC adopted "helped cushion our portfolio from the worst of the volatility in the financial markets in the first quarter of 2020," and now GIC stands "poised to invest and seize opportunities that can enhance our long-term returns," Mr. Lim said.