What GIC’s annual results tell us about sovereign wealth under Covid-19
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What GIC’s annual results tell us about sovereign wealth under Covid-19

The sovereign wealth fund is withdrawing to cash, has seen a once-in-a-generation drawdown and is positioning defensively.

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Today (Tuesday July 28) the Government of Singapore Investment Corporation (GIC), one of the biggest and most sophisticated sovereign wealth vehicles in the world, announced its full-year return to March 31 ,2020.

Chief executive Lim Chow Kiat has been saying for at least two years that high valuations, weakening fundamentals and political tensions around the world were becoming alarming.

That’s not to say he and his team saw the global pandemic coming – but it probably helped.

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Lim Chow Kiat, GIC 

“The defensive stance helped the portfolio withstand some of the more extreme market movements,” Lim said today, and one can see the caution in the difference between the asset mixes one year apart.

Between March 31, 2019 and the same date in 2020, the proportion of the portfolio allocated to nominal bonds and cash jumped from 39% to 44%, and inflation-linked bonds from 5% to 6%.

Equities fell proportionally (developed market from 19% to 15%, emerging market from 18% to 15%).

Real estate was flat, and private equity up, from 12% to 13%, despite a perennial challenge for the fund in finding places to deploy its money.

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