We are 35 this year. Still young.
But in the Singapore context the anniversary is significant, particularly as it comes so soon after celebrating 50 years as a nation – a landmark that has sparked a major retrospection on what has driven our country’s extraordinary rise. Since 1981, GIC has played an integral part in the success of Singapore through the management of the nation’s foreign reserves
Further, the investment returns of GIC, together with that of the Monetary Authority of Singapore and Temasek Holdings, have contributed to the Singapore Government’s Budget through the framework set out in the Singapore Constitution.
Through the continual review of how we organize ourselves, respond to changes in the investment environment and develop our capabilities, we aim to fulfill our mandate to preserve and enhance the reserves that benefit the present and future generations of Singaporeans.
GIC achieved a 20-year annualised rate of return of 4.0% above global inflation for the financial year ended 31 March 2016.
Given the strong performance across major asset classes in the past five years, valuations are high. This, together with limited improvement in the outlook for economic growth and earnings across the world, portends lower expected returns over the next decade. The path will also be volatile, as policymakers in the many large economies embark on the difficult task of steering their unprecedented policy measures with unpredictable outcomes. Changes in market structure such as high frequency trading and a tighter regulatory framework constraining banks’ balance sheets and impacting market liquidity, could further amplify market moves. We remain cautious in our outlook but believe that staying with our long-term investment approach will allow us to take advantage of attractive opportunities from such challenging situations.
Our globally diversified portfolio is positioned to withstand short-term market volatility, yet still reap strong returns over the long term.
Our long-term orientation also means that the GIC Portfolio has to be significantly different from a portfolio of global equities and global fixed income market indices. This implies that our investment performance cannot be expected to surpass the global market indices every year or even every 5 or 10 years. What is critical is that the GIC Portfolio will produce positive real returns and surpass the global indices over the longer term.
We recognise the important role of culture in a successful organization and have worked hard to develop ours. We emphasise prudence, discipline and the pursuit of excellence, trusting our staff to execute their work to the highest standards with the highest integrity and to strive always to be the best that they can be. Culture needs to start at the top. Leadership in GIC is about asking a key question: How can I help you do your job better? This is premised on the belief that by focusing on others, not on ourselves as individuals, we will build a strong sense of self-confidence to do things right and to do things differently from others if our convictions move us to do so.
Developing organizational leadership is a continuous challenge to spot talent as early as possible, and to develop talent with suitable exposure and challenging assignments. With new leadership appointments, effective 1 June 2016, GIC positions itself for continuing success in an ever changing investment environment.
On 1 June 2016, new appointments took effect:
We thank generations of GIC staff who have collectively steered the organization and contributed to our mission to secure the financial future of Singapore. We will continue to adapt our investment processes and operations, and develop our people to meet the future challenges as we strive to invest well for the nation.
In these volatile times, we continually learn from others and at the same time do our part in sharing knowledge with others. A particular example is the International Forum of Sovereign Wealth Funds (IFSWF). We are one of the early architects of the Santiago Principles. GIC continues to play an active role in promoting these principles and explaining the value SWFs bring to the investment community. We are pleased to announce the appointment of Ms Deanna Ong, Company Secretary and Managing Director of GIC, to the IFSWF Board on 1 October 2015.
At GIC, our work becomes tougher as the world we face becomes more complex and volatile. The skills and expertise required to be successful today are different from those needed 35 years ago, and will change again in the future.
We need to learn well - it is the wisdom of hindsight. We need to think well - it is the wisdom of insight. We need to see well - it is the wisdom of foresight.
We welcome Mr Koh Boon Hwee who joined us on 15 January this year as the newest member of the GIC Investment Board. Mr Koh is the Executive Chairman of Credence Partners Pte Ltd and a distinguished corporate leader who has investment experience especially in technology and venture capital.