SINGAPORE – Sovereign wealth fund GIC has managed to weather a tumultuous global environment that included rising prices and volatile markets to post a stable return for the year.
But it says the environment for investors remains challenging and broad market returns going forward are likely to be low.
GIC, which is one of the three entities charged with managing Singapore’s reserves, recorded an annualised rolling 20-year real rate of return of 4.2 per cent for the period ending March 31, after stripping away inflation. This means that every $100 invested with GIC in 2003 would have grown to $228 today, after taking inflation into account.
The figure is higher than the relevant average global inflation rate – which by one measure stood at around 2.8 per cent in the same period – though it marks a slight dip from the 4.3 per cent annualised return in the previous financial year.
To smoothen out volatility, the fund measures its performance by evaluating returns over a 20-year period, which started in April 2002 for the financial year just ended.
GIC chief executive Lim Chow Kiat said at a briefing yesterday that investors now face an investment landscape filled with profound uncertainties.
“The macroeconomic environment has entered a high-inflation regime, driven by supply chain disruptions, a rapid recovery in demand and rising wages,” he said.
The world is also facing higher risks of fragmentation as geopolitical tensions continue to rise, Mr Lim noted.
Looking ahead, he said the broader market returns “were likely to be low”.
“Until we have more so-called restoration of value – meaning yields come up – whether it is bond yields or earnings yields or dividend yields, which may come because prices are lower or somehow, the companies are all doing better, (general) return prospects are still not great,” Mr Lim said.
The stable showing from GIC will help bolster Singapore’s Budget spending.