GIC Annual Report 2020/21 Investment Report




Investment Report

GIC’s mandate is to preserve and enhance the international purchasing power of the reserves under our management over the long term.


2.1 Overview: Long-term Investment Performance

GIC’s mandate is to preserve and enhance the international purchasing power of the reserves under our management over the long term. The primary metric for evaluating GIC’s investment performance is the annualised rolling 20-year real rate of return, which recorded 4.3% this year. Similar to recent years, large asset price moves at the start of the 20-year window affected the rolling 20-year return. The rolling off of a year of poor returns in FY2000/01 arising from the dot-com crash coupled with a strong rebound in risk assets over the past year contributed meaningfully to this year’s 20-year return.

See below for more detail on the mechanics behind the calculation of the 20-year rolling return.

Annualised Rolling 20-Year Real Rate of Return of the GIC Portfolio since 2001






Year ended 31 March

Understanding the Mechanics of the Annualised 20-Year Rolling Return

GIC reports its performance as an annualised 20-year real return, which is the average time-weighted portfolio return over that period. A time-weighted return essentially measures the fund manager’s ability to generate returns, as it removes the impact of cashflows into or out of the portfolio and directly attributes the performance to the investment decisions made by the portfolio manager.

The return figure is a rolling return, which means that last year’s 20-year return spans the period 2001 to 2020, this year’s 20-year return spans 2002 to 2021, and next year’s return will span 2003 to 2022. For each new year added, the earliest year is dropped out of the measurement window. The change in this rolling return figure is therefore determined by the returns from the earliest year that drops out and the latest year that is added.

Even though the rolling 20-year real rate of return is intended to measure returns over the long term, it can still reflect a significant cyclical element. This is particularly evident when the cycles are very pronounced at the start or end of the 20-year window. For example, a 20-year period from 1999 to 2018 would include the sharp rise in valuations resulting from the dot-com boom in 1999 and 2000 and the subsequent bust in 2001, whilst a 20-year period from 2001 to 2020 would be much more negatively affected by the large decline in asset prices from the dot-com bust in 2001.

Figure 2: Illustration of a portfolio's rolling 20-year return

20-Year Return









Over the long term, GIC’s performance is largely driven by the dynamics of the global economy and our Policy Portfolio, which determines our asset allocation strategy. Skill-based strategies undertaken by our active strategy investment teams seek to add returns above market benchmarks. In total, we strive to achieve good and sustainable long-term returns for the GIC Portfolio across a broad range of economic scenarios, within the risk parameters set by the Client. This is described in greater detail in the chapter ‘Managing the Portfolio’.

In 2020, following the lockdowns over broad swathes of the global economy aimed at curtailing the spread of COVID-19, the global economy shrank by 3.3%. This was far worse than the contraction of 0.1% experienced during the Global Financial Crisis. In contrast, equity markets, which fell sharply in March 2020, rebounded robustly in the subsequent year in response to the unprecedented speed and size of global policy intervention, with returns of ~55%. The pace of recovery varied across regions, countries and sectors, depending on their valuation levels following the market drawdown in 1Q 2020, their level of success in controlling COVID-19, the size and efficacy of fiscal and monetary response, and the pandemic’s impact on specific sectors. The markets priced in expectations of a strong economic recovery, given the substantial US fiscal stimulus plan and global rollout of vaccines, which resulted in bond yields rising over 1Q 2021.

Our diversified portfolio and cautious investment stance helped to cushion GIC’s performance from the market correction in 1Q 2020. This posture has continued into FY2020/21 given elevated asset valuations and uncertainty arising from potential inflationary pressures. We have kept our emphasis on being prepared for multiple scenarios, maintained price discipline, added optionality, and expanded our bottom-up investment activities.


2.2 The GIC Portfolio

As set out in the table below, over the year to end March 2021, the share of emerging market equities rose, while that of nominal bonds and cash fell, in line with the broader market trends described earlier. The share of private equity and real estate increased due to robust deal activity and strong asset performance over FY2020/21.

Table 1: Asset mix of the GIC Portfolio

Asset Mix

31 March 2021 (%)

31 March 2020 (%)

Developed Markets Equities



Emerging Markets Equities



Nominal Bonds and Cash



Inflation-Linked Bonds



Real Estate



Private Equity






The geographical distribution of the GIC Portfolio as at 31 March 2021 is set out in figure 3. This mainly reflects the global market composition of our asset allocation strategy and bottom-up opportunities sourced by our investment teams worldwide. While we do not allocate our assets by geography, we monitor our exposures across them.

Figure 3: Geographic mix of the GIC Portfolio as at 31 March 2021

Geographic mix as at March 2021 4: United States (34%); Latin America (3%); United Kingdom (5%); Eurozone (9%); Middle East, Africa, and the rest of Europe (5%); Japan (8%); Asia ex Japan (26%); Global (10%).

Hover to view stats 26% Asia ex Japan 8% Japan 5% UnitedKingdom 9% Eurozone 10% Global 5% Middle East,Africa, and the rest of Europe 3% Latin America 34% United States


2.3 Intermediate Markers of Investment Performance

While the primary metric for tracking GIC’s investment performance is the 20-year returns above global inflation, we also monitor its ongoing intermediate investment performance. Table 2 shows the nominal (i.e. not adjusted for inflation) USD returns over 10 years and five years and the corresponding portfolio volatility. We include 20-year nominal numbers for completeness here.

Table 2: Nominal Annualised Return and Volatility of the GIC Portfolio (in USD, for periods ending 31 March 2021)

GIC Portfolio













Over the 20-, 10- and 5-year periods, the GIC Portfolio returned 6.8%, 6.2% and 8.8% in nominal USD terms respectively, in line with the broader asset markets. The 5-year return was more pronounced due to the greater weight of the strong market recovery in FY2020/21.

We also monitor the performance of a Reference Portfolio which comprises 65% global equities and 35% global bonds. The Reference Portfolio is not a performance benchmark for the GIC Portfolio, but represents the risk the Client is prepared for GIC to take in generating good long-term investment returns. On occasions when GIC’s risk preference differs from the risk profile of the reference portfolio, such as when market exuberance leads to heightened valuations, GIC may choose to lower its risk exposure. Conversely, GIC may increase its risk exposure when the opportunity arises. This is part of a disciplined, professional approach to long-term value investing. For example, given weakening fundamentals and rising market uncertainty, GIC reduced risk-taking in markets that appeared overpriced before 2020.

The table below shows the nominal  USD returns over 20 years, 10 years and 5 years and the corresponding volatility for the Reference Portfolio. Over all three time periods, and particularly over the last five years, the GIC Portfolio had lower volatility than the Reference Portfolio due to its diversified asset composition and pre-emptive measures to lower portfolio risk in recent years. Over a 20-year period, the GIC portfolio saw a similar return but with much lower risk than the Reference Portfolio. This reflected the value of our long-term investment approach and mandate, which is to first protect and then grow the reserves under our management.

Table 3: Nominal Annualised Return and Volatility of the Reference Portfolio (in USD, for periods ending 31 March 2021)

Reference Portfolio













GIC's partnership approach

GIC not only has an internal operation to invest directly, but also works with external partners to enhance our capabilities. These partnerships have expanded our investment universe and network, widened our perspectives, and deepened our business and operating expertise.

Our approach started with allocating funds to external managers, but has now extended to other asset owners, investee companies, past and present senior leaders of prominent global companies, family offices and leading entrepreneurs.

As outlined, having a long-term perspective on our investments and relationships and local presence in both the developed and emerging markets (see figure 4) have been helpful to our partnership effort:

Long-term and flexible capital

Our long investment horizon gives certainty to our partners to commit to ventures which may take time and endurance of volatility to see results. In addition, our flexibility in deploying capital across the private, semi-private and public markets supports different capital needs as our partners go through different phases of growth. Not only can we invest from the start-up phase through multiple funding rounds, but also follow through to post-IPO and subsequent placements; or even in reverse via public to private transactions.

Capacity to execute co-investments

Our long history of co-investing with select external managers and our direct investing effort have enabled us to be responsive to co-investment opportunities. We strive to support our partners with speed, clarity, and fair terms.

Global connector, particularly to Asia

Our experience and network in the Asian region have allowed us to be a useful partner to the US and European-based investors and investee companies for their Asian ventures. This remains a key strength given Asia’s favourable economic and business growth potential.

Multi-faceted investment partnership

As an asset owner investing in multiple asset classes, our linkages with major partners tend to be multi-faceted. With our major direct investees, we may be simultaneously their shareholder, bondholder, and landlord. With our most trusted fund managers, beyond investing in their multiple funds, we are regularly co-investors and counterparts in large transactions.

Constructive engagement and sharing of network

We engage our partners on important structural themes like digital disruption and sustainability as we believe these trends will impact the longer-term prospects of assets and companies. In addition, we actively share our global relationships through bilateral introductions and several exclusive networking initiatives for our partners. Our annual flagship event, GIC Insights, brings together a select group of top business leaders to connect with GIC and each other and discuss relevant long-term issues. In addition, our Silicon Valley-based Bridge Forum, a collaboration with the Singapore Economic Development Board (EDB), facilitates not only the exchange of ideas with leading technology companies but also the one-on-one meetings curated between next-generation start-ups and global corporations. Finally, our GIC Investment Advisors programme (GIA), comprising a select group of prominent senior leaders and CEOs who are familiar with GIC and our investing approach from their past careers, helps our investee companies navigate business challenges through board participation and other ways.

By offering long-term capital, internal and external expertise and global connections, we strive to add meaningful value to our partnerships and investments. Amidst the challenging investment environment, we see being a partner of choice as critical for our mission.

Figure 4: GIC’s global presence via our offices around the world

Investing globally for 40 years Global scale, presence, and network 1981 Singapore Headquarters 1984 New York 1986 San Francisco 1988 Tokyo 1990 London 1998 Beijing 2005 Seoul 2007 Shanghai 2010 Mumbai 2014 São Paulo 2022 Sydney (Planned) Investing globally for 40 years Global scale, presence, and network Singapore Headquarters 1981 New York 1984 San Francisco 1986 Tokyo 1988 London 1990 Beijing 1998 Seoul 2005 Shanghai 2007 Mumbai 2010 São Paulo 2014 Sydney (Planned) 2022

Transitioning to a post-pandemic world

Cautious on macro

The COVID-19 pandemic in 2020 has been one of the toughest economic times in modern history. Not only did we see the largest global economic contraction since World War II, but also the highest synchronisation of national recessions in over 150 years. In contrast, global equity markets recovered sharply from its low in March 2020, rising by 55% over the year to reach new highs by end March 2021 (see Figure 5), as the unprecedented speed and scale of policy intervention globally helped to support jobs, incomes and the capital markets.

Figure 5: Global equity market total returns index in USD

0 600 300 900 1200 1500 1995 2000 2005 2010 2015 2020

Source: MSCI ACWI Gross USD Returns Index; Bloomberg

Major central banks in developed markets have declared their intention to keep interest rates low as business and employment conditions will take time to normalise, notably in the markets and sectors hardest hit by the pandemic. Globally, the accommodative policy setting, COVID-19 vaccination rollout and large fiscal stimulus, particularly in the US, are expected to boost economic growth significantly in the near term. Many emerging markets will also benefit from a recovery in global activity, though the cyclical and structural growth story remains highly differentiated.

However, as we extend the horizon of the outlook, the range of outcomes widens substantially. The strength of the global demand upturn depends on the uncertain trajectory of the pandemic. While policy stimulus in major economies has helped cushion the impact of lockdowns on household income, job losses, and corporate insolvencies, exiting from such extraordinary policies could be challenging. A strong recovery amidst abundant liquidity may boost inflation, which could limit policy accommodation. Should bond yields rise and economic growth lag, governments in economies that rely on external funding or lack strong institutional credibility may need to hike taxes or cut spending to cover the budget shortfalls, constraining their policy room. This scenario is also particularly concerning given the sharp rise in global government debt, which reached 87% of global GDP by end 2020 (see Figure 6), the highest level since World War II. Coupled with elevated equity valuations, notably in the US (see Figure 7), this high degree of uncertainty has made us macro-cautious.

Figure 6. Global government debt to GDP

20% 40% 60% 80% 100% 1890 1900 1880 1910 1920 1930 1940 1960 1980 1970 1990 2000 2010 1950 2020 COVID-19 GlobalFinancialCrisis WorldWar II WorldWar I

Source: IMF Historical Debt Database, IMF WEO, Maddison Database Project, GIC Calculations

Figure 7. Market capitalisation to GDP

0% 50% 100% 150% 200% 250% 1997 1999 1995 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021


Developed Markets ex US

Emerging Markets

Sources: World Federation of Exchanges, Bloomberg, IMF, GIC Calculations

Positive on micro

As we transition to a post-pandemic world, we believe that over the longer term, three major trends will drive markets and open up new areas of growth. These are best captured by our bottom-up portfolio managers and specialists across our offices globally. While we remain macro-cautious, we are micro-positive on these opportunities.

First is the accelerating technological transformation, including new scientific and engineering solutions to be commercialised. Already intensifying digitalisation has enabled companies to scale quickly and spawn new businesses, as discussed in our past reports. New technology will likely disrupt existing business models in many industries including finance, healthcare, automotive, energy and infrastructure. Investors have much to grapple with.

Second, sustainability will continue to be a key priority for GIC. We expect consumer preferences and government policies to continue emphasising the importance of climate-friendly practices. As a long-term investor, we seek to invest into this trend whilst protecting our portfolio assets from being negatively affected; integrate sustainability into our portfolio and investment processes holistically, taking into account the diversity of the industries and markets we operate in; and engage and support our investees and partners in their transition towards sustainability.

Third is the growing influence of geopolitics on capital markets. While geopolitics has always been an important factor for investors to consider in their assessment of opportunities, the increasing rivalry between major powers has elevated its importance in recent years. Indeed, on one particular measure, global political risk rose to a multi-year high in 2020. The range of issues impacted by the strategic competition has broadened beyond trade, and now include technology, data, and market access. Investors will need to navigate these dynamics by diversifying their portfolios while responding nimbly to changing situations.

The COVID-19 crisis has led to fundamental changes in the macro and micro environments. We expect to see continued uncertainty as new norms evolve. We will stay anchored in our mandate, values and investing principles, by emphasising diversification, long-term approach, building optionality, pursuing bottom-up opportunities, and adding value to our partnerships and investments.

Explore sections

  1. 1

    A time-weighted return measures the total rate of return over a specific time period by compounding the returns across multiple sub-periods.

  2. 2

    Source: IMF

  3. 3

    MSCI ACWI (All Country World Index) gross returns in USD. Source: MSCI

  4. 4

    Geographic mix was refined to reduce potential distortions arising from currency hedges.

  5. 5

    GIC’s primary performance measurement metric is the rolling 20-year real rate of return, which we described earlier in this chapter.

  6. 6

    The GIC Portfolio rates of return are computed on a time-weighted basis, net of costs and fees incurred in the management of the portfolio.

  7. 7

    Volatility is computed using the standard deviation of the monthly returns of the GIC Portfolio over the specified time horizon.

  8. 8

    The Reference Portfolio was adopted from 1 April 2013, and reflects the risk that the Government is prepared for GIC to take in its long-term investment strategies. It comprises 65% global equities and 35% global bonds. For more details, please refer to the chapter on ‘Managing the Portfolio’.

  9. 9

    The figures exclude adjustments for costs that would be incurred when investing.

  10. 10

    The Reference Portfolio rates of return are provided on a gross basis, i.e. without adjustment for costs and fees.

  11. 11

    Volatility is computed using the standard deviation of the monthly returns of the Reference Portfolio over the specified time horizon.

  12. 12

    Source: World Bank

  13. 13

    Fiscal stimulus amounted to US$12.7 trillion in 2020 (14% of 2019 world nominal GDP).
    Since March 2020, 92 central banks have cut policy rates a total of 241 times, with additional monetary and prudential measures to boost liquidity and ensure financial stability, such as direct asset purchases.
    Sources: United Nations February 2021 Report;
    World nominal US$ GDP in 2019 was sourced from World Bank

  14. 15

    Based on a McKinsey Global Survey of Executives done in July 2020, companies accelerated the digitisation of their customer and supply-chain interactions and internal operations by three to four years, and the share of digital or digitally enabled products in their portfolios by seven years.