Singapore SWF GIC To Boost Infrastructural Investment amid Record Returns

Singapore sovereign wealth fund GIC reported its highest returns since 2015 for the most recent fiscal year, but warned of "challenging" prospects ahead due to sticky inflation and other economic headwinds.

To manage these risks, it stated that it would continue to prioritise investments with "stable long-term returns," such as infrastructure.

GIC stated in its 2022/23 annual report released on Wednesday (Jul 26) that its 20-year annualised real rate of return was 4.6 percent for the fiscal year ended March 31. This was an increase from the previous fiscal year's 4.2 percent, and it was the highest since 2015, when real returns reached 4.9 percent.

The 20-year metric, which is a primary indicator of GIC performance, is a "rolling" return in which years are dropped and added as the computation window moves.

For example, the figure for FY2022/23 represented the average annual return of GIC's portfolio between April 2003 and March 2023, adjusted for global inflation.

According to GIC, 2022 will be a difficult year, with soaring inflation and aggressive monetary policy tightening, Russia's invasion of Ukraine, and a deterioration in US-China relations. In the midst of a difficult market environment, both the equity and bond markets corrected.

A diversified portfolio and cautious investment stance provided it with some cushion from the market correction, it said.

The drop-out of “a very weak year” – caused by the dotcom crash in the early 2000s – from the 20-year window also helped to shore up GIC's key return metric, said chief executive officer Lim Chow Kiat at a press briefing ahead of the report’s release.