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My five conclusions on the #GIC annual report today: look out for a full article on @euromoney later today.
1. Lim Chow Kiat didn't predict a global pandemic, but GIC was well positioned for it having argued for years that high valuations, weak fundamentals and political tensions were a problem. At March 31 GIC was 44% in nominal bonds and cash. This helped.
2. The drawdown of reserves is unprecedented: S$52 billion from past reserves on top of the usual NIRC contributions. It is only the second ever withdrawal of this kind from GIC, and more than 10 times the size of the last one in the GFC.
3. The biggest impact on the 20-year return, the headline number which fell from 3.4% to 2.7%, was actually not Covid, but the tech boom 21 years ago. As that number came out of the rolling results, the return number fell thanks to what happened two decades ago.
4. Asia looking good? Geographical allocations go like this: 34% US, Eurozone 13%, UK 6% (all underweights compared to many similar funds). ex-Japan Asia 19%, Japan 13%, LatAm 2, Middle East/Africa 5, rest of the world 8. Review says Asia looks good for the long term.
5. In the essay reading the tea leaves and looking to the future, the most interesting thing is the suggestion that we could return to higher inflation, because central banks have stopped trying to stop it pre-emptively. That would be a whole new world for sovereign wealth funds.
