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Unpacking the GIC result: why all that effort gets only 3.4%

Should an institution with all that scale and ability be delivering more than this? The problem with long-term numbers is they still reflect issues from 20 years ago.


The Government of Singapore Investment Corporation (GIC), one of the world’s largest and most sophisticated sovereign wealth funds, released on Wednesday its annual report, including its performance numbers.

The result: its 1,500 employees, known throughout the industry as some of the smartest minds in the business, between them achieved an annualized 20-year real rate of return of 3.4%.

It doesn’t sound much for such a vast and capable investment engine. But there are reasons for this, which remind us that no matter how long the time horizon, numbers always need a closer look.

The problem GIC is facing in its long-term numbers is that in stating performance relative to 20 years ago, it is taking us back to the late 1990s. By then, the tech bubble was in full swing. For a couple of years now, GIC’s numbers have felt the effect of the tech bubble gains falling out of the range while the post-bubble declines are still in there. 

Next year’s return will span 2001 to 2020, so the same problem is going to be evident for a while.

Intergenerational investor

It’s also worth remembering that 3.4%

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