Singapore Wealth Fund Says Investments Fell 20% in Year - NYTimes.com

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By REUTERS

SINGAPORE — G.I.C., a sovereign wealth fund of Singapore, said Tuesday that its investments fell more than 20 percent in the year that ended in March, but recovered more than half that loss during the rally on financial markets since then.

G.L.C., or the Government of Singapore Investment Corp., the larger of the city-state’s two wealth funds, said it had increased exposure to alternative investments like real estate and natural resources but was bearish on bonds. The fund said its managers were optimistic about emerging markets and Asia.

The fund’s portfolio shrank by more than a fifth in the year that ended March 31, but it has ridden the financial meltdown better than its sister fund Temasek by paring its exposure to equities before the crisis and through a well-timed sale of part of its Citigroup holding.

G.I.C., headed by Lee Kuan Yew, the former prime minister, is the largest sovereign fund in the world after those of Abu Dhabi, Saudi Arabia and Norway, according to Deutsche Bank.

The fund says it manages more than $100 billion; analysts estimate the figure at $200 billion to $300 billion.

It said in the annual report that cash represented 8 percent of its holdings at the end of March, up from 7 percent a year earlier. The fund appears eager to put that money to use soon.

“In normal circumstances, we should not be holding cash, particularly now when cash earns you close to zero interest,” the fund’s chief investment officer, Ng Kok Song, said in a statement accompanying the report.

Mr. Ng also said bonds had become riskier because of the threat of rising inflation, as Western governments and central banks faced political constraints in an environment of high unemployment that could prevent them from unwinding stimulus measures.

“Global economic growth will be higher in the emerging than the developed economies,” he said. “The developed economies will undergo further deleveraging, while the emerging economies will be compelled to engender domestic demand.”

Sovereign wealth funds, like most investors, were badly hit by the meltdown in global financial markets. The funds, which together manage an estimated $3 trillion, were big investors in Western banks at the start of the financial crisis but many have since pared their stakes.

G.I.C. said its investment in UBS was still showing a loss. This month, it said it had made a $1.6 billion profit from halving its stake in Citigroup.

G.I.C.’s annual performance and subsequent recovery resemble that of Temasek, which said this month that its portfolio slumped by 55 billion Singaporean dollars, or $38.8 billion, in the year that ended in March, a 30 percent decline, before recouping most of its losses.