Finance
GIC posts 3.9% 20-year annualized real rate of return, weakest investment gains in four years
Singapore’s sovereign wealth fund GIC reported a decline in returns for the past financial year without specifying the sum and cautioned that “profound uncertainty” will continue impacting future returns. In its annual report for 2023/2024, GIC disclosed a 20-year annualized real rate of return of 3.9% for the year ending March 31, compared to 4.6% last year. The growth pace was the slowest since its 2.7% investment return in 2020.
![](https://gutzymedia.s3.ap-northeast-2.amazonaws.com/wp/2023/07/17063305/GIC.png)
Singapore’s Sovereign wealth fund GIC reported a decline in returns for the past financial year and cautioned that “profound uncertainty” will continue impacting future returns.
Despite this, GIC plans to leverage its strengths and explore new opportunities amidst the volatility, including investments in climate transition.
In its annual report for 2023/2024, released on Wednesday (24 July), GIC disclosed a 20-year annualized real rate of return of 3.9% for the year ending March 31.
This is a decrease from the 4.6% reported last year, the highest return since 2015.
The 20-year metric, a key indicator of GIC’s performance, reflects a “rolling” return in which years are added and removed as the computation window progresses.
For FY2023/24, this figure represents the average annual return of GIC’s portfolio from April 2004 to March 2024, adjusted for global inflation.
The report notes that this year’s 20-year return saw the strong performance from April 2003 to March 2004—when equity markets rebounded from the dot-com crisis—drop out of the rolling window.
GIC, one of the three entities managing Singapore’s reserves, oversees US$770 billion in assets, according to estimates from the Sovereign Wealth Fund Institute.
While GIC does not report its annual performance, its 5-, 10-, and 20-year returns showed relatively minor changes.
The annualized 20-year nominal return dropped to 5.8% from 6.9% a year ago, whereas the annualized 5-year nominal return rose slightly to 4.4%.
GIC report noted that despite the resilience of the global economy in 2023, supported by a slowdown in inflation and robust performance in risk assets, increased enthusiasm for generative artificial intelligence also contributed to gains in the tech sector.
However, geopolitical risks escalated with the continuation of the Russia-Ukraine war and the outbreak of conflict in the Middle East in October.
“The resulting spectre of commodity and supply chain disruptions heightens the risks of resurgent inflation and lower growth,” the report stated.
CEO Lim Chow Kiat noted in the report that uncertainty has reached a “profound level” in recent years, challenging the foundational assumptions of the past four decades.
He highlighted political instability in some countries, rapid technological advancements, and climate change as key factors.
“It is no longer sufficient for investors to only consider where we are in the macroeconomic cycle or the future path of interest rates.”
“This unprecedented uncertainty translates into a wider range of possible outcomes. Pitfalls and windfalls await in equal measure, ” Mr Lim added.
Lim cited the climate transition as an example of how GIC’s long-term flexible capital can make a significant impact.
Investors are beginning to realize that financing the transition may entail short-term opportunity costs they are unwilling to bear, resulting in fewer exits and a decline in venture and growth investments in the sector.
However, a team within GIC’s private equity department identified companies needing funds to scale up “first-of-a-kind” projects that typically fall outside traditional capital allocations and launched an investment program for green assets.
“Patient capital like ours is well-suited to navigate climate tech’s potential J-curve,” said Lim.
GIC Chief Investment Officer Jeffrey Jaensubhakij highlighted nuclear fusion as an example of a long-horizon investment.
The fund invested in a nuclear fusion company around three years ago, with the technology still being eight to ten years away from fruition.
GIC reported that tight monetary policy in the US, China’s property market issues, and heightened geopolitical tensions make the global investment environment challenging.
“Moreover, medium-term return prospects remain low, and risk-reward less favourable, given elevated valuations across many risk assets, particularly in developed markets,” GIC added.
However, it noted that the faster adoption of AI could drive higher productivity growth.
While the global economy has shown resilience, this can slow the disinflation process.
Some major central banks have delayed their plans or done less than expected, said GIC.
“If inflation proves more persistent than expected and even increases, core central banks may not only have to keep rates higher for longer but potentially raise them,” the report said.
“This would increase recession risks and put strains on households and businesses already struggling with high borrowing costs.”
According to its report, GIC’s exposure to the U.S. increased to 39% of its total investment portfolio for the year ending March 31, 2024, up from 38% the previous year.
Exposure to the U.K. and Eurozone rose to 5% and 10%, respectively, from 4% and 9%.
In contrast, exposure to Japan and Asia (excluding Japan) decreased to 4% and 22%, down from 6% and 23%. The report does not disclose China’s share.
As China experiences slower economic growth, GIC noted it is becoming more selective and exploring opportunities in advanced manufacturing, industrials, and niche areas like residential-for-rent businesses.
![](https://gutzy.asia/wp-content/uploads/2023/10/Gutzy-Logo-whiteS.png)
-
Politics1 week ago
Jamus Lim on Minister Chee Hong Tat’s remarks on fiscal policy: Calls for genuine debate over rhetoric
-
Politics2 weeks ago
SM Lee: Singaporeans must ‘change attitudes’ as Govt promises ‘bold and necessary changes’
-
Community1 week ago
Toast Box faces backlash and boycott calls amid price increases
-
Media1 week ago
Notice to Our Readers: Moving Back to The Online Citizen
-
Singapore2 weeks ago
Singapore introduces new scheme in April 2025 offering up to S$6,000 in financial support for retrenched workers
-
Politics1 week ago
Jamus Lim raises concerns over high cost of living and its impact on Singaporeans’ sense of belonging
-
Opinion1 week ago
Chee Hong Tat’s call for fiscal prudence rings hollow amid contradictory government spending
-
Singapore1 week ago
Tan Suee Chieh: Sacrificing NTUC Income’s values for short-term gains undermines its foundation
the situation and common pov circa 2022, 2023 was that it was easier to make money than to lose money. the consensus was anyone/funds who managed to lose money during that period shouldnt be in the business of managing money.
Ha,
MAS 0.76%
now GIC 3.9% over 20 years ie. Average of 0.195% annually,
Temasick ?? Dead lah, 0.009%?
This is no brain culture as this 20 year timeframe could be the best showing that they could pick in order to hide their failure. There will come a time when it will further be broken down to year-month-day (for example 21 years 2 months and 8 days for a historical 1.9% rate of return) as this timeframe is best to hide their incompetency. In short the annualised return is always heading south. If nett investment income return is coming down, doesn’t it mean that the taxes will have to go up to cover for the shortfall of projected expenditure?… Read more »
FY2023/2024 vs FY2022/2023 the % drop in performance is actually 15.2%. The Sovereign Wealth Fund Institute (SWFI) had estimated the fund’s assets at US$770 billion as of September 2023 while Forbes estimated the fund’s assets at US$744 billion after legislation were passed to transfer about US$137 billion from the Monetary Authority of Singapore. If we use US$744 billion for calculation, it meant GIC making estimated US$113 billion lesser comparing last two financial years. If we use the US$744 billion to calculate absolute earnings, it will be USD$29 billion in profits for FY2023/2024. How much $$$ in total GIC spends on… Read more »
Why must use a 20-year average return and not 2022 vs 2023 return?
Another massaging and window dressing in order to save Millionaire salaried faces?
If we add in inflation, the real return could be likely be disaster and may cause heart attacks throughout Singapore
In Malaysia, the agreements/contracts for the various toll collection of the highways are classified under OSA or Official Secret Act.
In Singapore, our elites at GIC go one better; they submerge all statistics under the so-called 20-year annualized real rate of return. That way, we do not know the yearly performance.
Looks like the GIC does not think it owes it to Singaporeans to be more transparent. Such behaviour shows how arrogant the GIC is.
When organisations do that, we know these organisations have things to hide.
So, how are bonuses or incentives given out each year?
For it to take just 1 year to drop the 20 year average by 0.7% must only mean that 2023 was a disaster, and they’re hiding it behind a 20 year average.
The response is also typical of PAP. Blame the external environment when things go wrong but are still shameless in pocketing millions in salary and bonuses.
On the other hand, when the funds are doing well, it’s always because of their “efforts” and not the external environment. Of course they would be even more shameless in awarding themselves higher bonuses.
Hold them accountable for all kinds of blatant “lapses” , by kicking them out …in the coming GE, just VTO.
Thats the only way we ordinary folks can do…or else no one or nothing can touch them…
Paid mil$ to lose citizens monies w/o batting an eyelid.
The result of BOASTFUL, ‘We can Afford to be CONTRARIAN’!
Loosing citizens money let OUT an Arrogant PHONY boast.
Who is this ‘we’?
Aiyaaah,no worry ah lah, WE got appetite for such measly returns & humongous losses!!!!!!!
Some statistics, dependent on subjects, released, in contexts of 3 years, some 5 years some, 11 years. Obviously these are presented in such a way as to blind sheeps, crimp thinking, and promote unquestionable obedience and trust. Only DISHONEST, FRAUDULENT entities do these.