Reflecting its primary mission of protecting and enhancing the value of the country's currency reserves, the annual report warned that the abrupt shift to inflationary headwinds from disinflationary tailwinds could reverse the gains GIC has made since its launch in 1981.
GIC responded to those inflationary challenges by boosting allocations to alternative assets such as real estate and infrastructure capable of boosting a portfolio's resilience when prices are rising, the annual report said.
At the close of its latest fiscal year, GIC was allocating 17% of its portfolio to private equity, up 2 percentage points from the prior year. Real estate accounted for 10% of the portfolio, up from 8%.
The remaining segments of GIC's policy allocation targets either declined or held steady, reflecting the sharp selloff of stocks and bonds in the final quarter of the fiscal year.
Nominal bonds and cash slipped to 37% of the portfolio from 39%, while developed market equities and emerging market equities edged down 1 percentage point apiece to 14% and 16%, respectively. Allocations to inflation-linked bonds held steady at 6%.
Those allocations leave GIC's exposure to developed market equities well below the fund's policy target range of between 20% and 30% while its nominal bonds and cash weighting remains well above its 25%-to-30% target.
Private equity, at 17%, is just above GIC's target range of 11% to 15%. Emerging markets equities, real estate and inflation-linked bonds, meanwhile, are all within their policy ranges.
By geography, the portfolio's investments in the U.S. jumped to 37% of GIC's portfolio from 34% the year before and Latin America rose one percentage point to 4%.
Allocations to Asia ex-Japan, the eurozone, Japan and the U.K. all slipped one percentage point apiece to 25%, 8%, 7% and 4%, respectively. Allocations to the Middle East, Africa and the rest of Europe held steady at 5%, with the rest of the globe likewise unchanged at 10%.
GIC also released nominal annualized return figures that showed its portfolio gains trailing the fund's 65% global equity-35% global bond reference portfolio for the five years and 10 years through March 31.
The GIC portfolio delivered annualized returns of 7.7% for the five years through March 31, below its reference portfolio return of 8.5%.
GIC, in a news release for the annual report, announced it had established a dedicated sustainability office to pursue more extensive research supporting the fund's "push to integrate sustainability into all our investment and corporate processes."
The sovereign wealth fund declines to reveal the size of its portfolio, only conceding that it exceeds $100 billion. Data provider Global SWF puts its assets at $799 billion.
