Date
22 January 2017
GIC Pte Ltd., which oversees US$344 billion in government assets, says ultra low interest rates have inflated asset prices in developed markets. Photo: Straits Times
GIC Pte Ltd., which oversees US$344 billion in government assets, says ultra low interest rates have inflated asset prices in developed markets. Photo: Straits Times

Singapore sovereign fund warns of lower returns in next 10 years

Singapore’s sovereign wealth fund expects lower returns in the next five to 10 years because of faltering global economic growth and earnings.

GIC Pte Ltd., whose largest investments are in North America, said ultra low interest rates have inflated asset prices in developed markets.

It said opportunities remain in developed and emerging markets, although it cut its exposure to Europe in the fiscal year to March 2015, according to the Wall Street Journal.

China, which has faced waves of market routs in the past month, remains a long-term investment destination for the fund, one of the world’s biggest.

GIC said its investments globally gave it a 4.9 percent 20-year real rate of return for the fiscal year that ended March 31, or a 6.1 percent return over the same period in US dollar terms.

“The challenge posed by higher current valuations, low starting yields and low potential future returns is common to all major asset classes; public equities, private equity, bonds and real estate,” GIC said in a report.

GIC manages Singapore’s foreign exchange reserves and oversees US$344 billion in assets.

The Americas remain GIC’s biggest investment destination, accounting for 43 percent of its assets last fiscal year, up from 42 percent.

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