Singapore's GIC reported annualized real returns for the 20 years through March 31 — the sovereign wealth fund's preferred metric for long-term performance — rebounded sharply to 4.3% from the 2.7% gains it reported for the two decades ended March 31, 2020. The prior year's figure dropped from 3.4% the year before as the final gains of the U.S. market's tech bubble were bumped from the 20-year span by the pandemic-ravaged year ending March 2020.
The latest results improved dramatically as the first year of the dot-com bubble fallout, ended March 31, 2001, dropped out of the calculation, to be replaced by the stimulus-fueled global rally of year ended March 31, 2021.
GIC CEO Lim Chow Kiat, writing in the fund's latest annual report, released July 23, said while the macro outlook looks challenging — with returns from a broad range of asset classes likely to be low for the coming five or 10 years — the micro outlook remains promising.
On that score, Mr. Lim said GIC's search for opportunities will be guided by three major trends: technological transformation, sustainability and the growing influence of geopolitics on capital markets.
"The increasing rivalry between major powers has elevated" the importance of geopolitical considerations in recent years, with the range of issues impacted broadening beyond trade to include technology, data and market access, according to GIC's annual report.
Against that backdrop, the U.S. remained GIC's top investment destination with a 34% share of the fund's portfolio, unchanged from the year before, but allocations to Asia ex-Japan jumped to 26% from 19%.
In other regions, the eurozone dropped to 9% from 13% and Japan fell to 8% from 13%. The U.K. slipped to 5% from 6%, while the Middle East, Africa and the rest of Europe held steady at 5%. Latin America rose to 3% from 2% and the rest of the world garnered 10%, up from 8%.
By asset class, meanwhile, GIC's emerging markets equity allocations rose to 17% from 15% the year before, surpassing its 15% weighting in developed markets equities.
The fund's private equity allocations rose to 15% from 13%, while real estate edged up to 8% from 7%.
Nominal bonds and cash, meanwhile, dropped to 39% of the portfolio from 44%, returning to the level that prevailed as of March 31, 2019. GIC's allocations to inflation-linked bonds held steady at 6%.