GIC posts 4.9% return in 20 years

Tougher times are on the horizon for GIC.

In an unexpected turn of events, GIC hit 4.9% return since 1995. But things aren’t going too well for the wealth fund moving forward as it dreads lower returns in the next 5 to 10 years.

“The path is also expected to be volatile, given the challenges that policymakers are likely to face in exiting from their extraordinary policy measures, plus changes in market structure that could amplify market moves. Our globally diversified portfolio allows us to withstand short-term market volatility,” a report from GIC said.

Meanwhile, the wealth fund is aiming to sustain its good returns in the long run by beating global inflation and preserving the international purchasing power of the reserves placed under its management.

“A long-term investment approach offers several advantages. It allows GIC to be contrarian in the face of short-term market sentiment, and reap higher long-term returns by assuming illiquidity risk. As such, our investments in private equity, for example, enhance the long-term returns of the GIC Portfolio,” the report said.

GIC also strives to take some calculated risks in its investment and become resilient despite fickle economic conditions.

“By spreading the investment of funds across asset types, geographical regions, industries, and companies, the GIC Portfolio is more diversified than the Reference Portfolio and less sensitive to equity market volatility,” the report explained.

“In USD nominal terms, the GIC Portfolio generated an annualised return of 6.1% over the same period,” the report added.