GIC portfolio mix heralds the top for private equity
Thirty percent of Singapore sovereign fund’s portfolio is in private equity or real estate. Surely this is as good as it gets for private markets.
Whenever Singapore’s GIC sovereign wealth fund reports its annual numbers, the first place we turn is the portfolio asset mix. Sovereign funds, in the main, move at a tectonic pace, so the year-on-year shifts are rarely dramatic. But viewed over a decent time horizon, they’re like rings in the trunk of a tree: each one identifiable as of a particular age and time.
Let’s compare this year’s report, expressing the position on March 31 2023, with the report for 2017. The differences are stark. Back then – and we’re only talking six years – private equity accounted for 9% of the portfolio (and that was considered pretty bullish) and real estate 7%.
Today, private equity is 17%, real estate 13%. In the same time frame, developed market equities have dropped from 27% of the portfolio to 13%, while emerging market equities (17% today), nominal bonds and cash (34%) and inflation-linked bonds (6%) have barely budged.
This is an allocation that reflects the themes either side of a pandemic: first, a zero interest rate environment in which yield was everything; then, in parallel, an environment in which the private markets came to demonstrate a risk-reward equation quite superior to that in listed markets.