Singapore’s sovereign wealth fund blues
Singapore’s sovereign wealth behemoths confront lagging returns
Singapore is the envy of the world in many regards, from its 10-second airport clearance time to its numerous Michelin-starred street-food vendors.
But when it comes to sovereign wealth fund investment returns? Not so much.
Despite being an island nation of just 6mn people, Singapore boasts two of the world’s biggest and best resourced state-owned investors: Temasek and GIC.
The FT’s Owen Walker took a deep dive into the reasons for their poor performance and how the funds are trying to make their portfolios more resilient in the face of more volatile market conditions to come.
DD readers are likely aware of the two financial behemoths, as they frequently pop up in deals around the world, from Silicon Valley to Shanghai.
Yet each has averaged an annual rate of return of just 5 per cent over the past decade. That places them well within the bottom quartile of a cohort of 50 similar institutions around the world.
At the same time, their importance to Singapore’s economy cannot be overestimated.
Contributions from Temasek and GIC — along with Singapore’s central bank — account for about 20 per cent of the city-state’s budget and have enabled it to maintain a surplus for much of the past two decades.
Their performance will be even more critical as Singapore’s population ages and becomes more reliant on the state.
“Their fund performance is the elephant in the room that nobody wants to talk about,” said Diego López, managing director of Global SWF, who is based in the city-state.