GIC outlines investment principles

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#1
GIC outlines investment principles

S'pore sovereign wealth fund uses 'heat map' to track global markets

Published on Mar 13, 2014

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GIC's Mr Lim Chow Kiat speaking at yesterday's conference. Among the fund's five principles is maintaining price discipline. -- PHOTO: LIANHE ZAOBAO

By Mok Fei Fei

GIC has offered insights into the five guiding principles it uses to ensure its investments achieve the best long-term returns for Singapore.

The sovereign wealth fund also said it uses a "heat map" of the globe monitoring the way various markets are performing by using different colours on the map.

The insights were offered by GIC's chief investment officer, Mr Lim Chow Kiat, when he spoke yesterday at the Investment Management Association of Singapore annual conference at Raffles City Convention Centre.

Even though there may be "short-term temptations", GIC's mission to safeguard and enhance the nation's reserves for the long haul is never forgotten, he noted.

GIC's manages more than US$100 billion (S$126.6 billion) of Singapore's foreign reserves.

Mr Lim pointed out that chief among the five principles is maintaining price and value discipline, by not paying too much beyond what the asset is worth.

"We take the view that the market would provide you with entry or exit opportunities and we do not act until we have those types of gaps existing."

Practising long-term investing is GIC's second key principle.

He said GIC has a minimum time horizon of five years, with a long-term view of 20 years. This view enables GIC to track how the short-term performance measures up to its projected returns.

Deviations from the expected returns can then be analysed to check if the blips are the result of market sentiment or fundamental changes to the asset.

Investment managers can then check whether GIC can meet its long-term objective of achieving a good return over inflation and to decide if the original strategy can be still be pursued.

The third principle is focusing on its strengths such as being able to hire external managers to help it generate additional returns.

Keeping a close eye on risks is the fourth principle for GIC, and it is not just the risks posed by changes in the prices of the asset, but political and reputational risks posed as well.

The fifth principle has to do with being prepared for the future, going through different scenarios that may affect the asset.

The hot markets on GIC's heat map now include developed markets, especially in the credit segment, though questions remain as to whether gains are sustainable.

"Away from the developed world, in the developing world, the map is a lot colder," he said.

But opportunities remain in emerging markets, which are seeing positive trends, such as increasing demand, said Mr Lim.

Singapore Management University associate professor of finance Annie Koh said GIC's investment principles showed it is being prudent and accountable in managing the wealth of the nation.

"If you look at cycles, they are always erratic... and if you keep trying to chase and market-time, you will never get it right perfectly, so I think the discipline behind the approach is what gives us a lot of confidence," she said.

feimok@sph.com.sg
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#2
I wonder if they have already recovered from their UBS losses
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#3
Crystal clear answer. Angry

In late 2007, GIC invested a massive 11 billion Swiss francs (then S$14 billion) - GIC’s largest investment ever – for a major stake in UBS.

According to Reuters, [b]GIC’s investment in UBS was later converted to UBS shares at 47.7 Swiss francs, making GIC the largest shareholder of UBS at 6.6% of equity.[/b]

[Image: jeZJiP3451rCL.png]
Source: Truly Singapore

Based on Friday’s (7 Mar) closing price for UBS shares of 18.63 Swiss francs, GIC has lost some 61% or S$8.5 billion.

http://www.tremeritus.com/2014/03/09/jos...ore-risks/

(13-03-2014, 10:40 AM)propertyinvestor Wrote: I wonder if they have already recovered from their UBS losses
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#4
UBS stake: holding period 20 years mah.....the rule "Market can stay irrational than you can stay solvent" dont really applies to GIC and TH.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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#5
Not to take sides here, but I notice that alot of people particularly the opposition supporters often are too quick to highlight the massive losses made without giving credit whenever massive profit is made by these government investment arms.
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#6
The "extraordinary" performance of our Elite is reflected clearly in the difference in interest rate between Malaysia EPF and Singapore CPF via the reward to their citizens. Sad

Malaysia EFP vs Singapore CPF

When Mr Singh referenced Malaysia's Employees Provident Fund’s (EPF) 6% interest rate,
[Image: jbuvvoILjdgKO5.png]
she (Josephine Teo) also stressed the need to bear in mind that interest rates are typically higher in countries whose currencies have tended to depreciate over time, “because higher interest rates compensate for weaker currencies”.

Really?
[Image: jSiP0dQr2Vqvd.png]
The plain truth is that EPF Protects its members from INFLATION and RETURNS ALL MONIES to its members

===> while CPF DOES NOT,

having made us all captive investors for their miserly pittance and yet consigned us to the UNCERTAINTY of NOT GETTING BACK all our monies.

===> CPF is NOT SAFE because the 2.5% rate

DOES NOT PROTECT holders from the effect of INFLATION which has averaged 3.7% past 7 years.

[Image: jKRmV7vZnMvdQ.jpg]

Quote:There are two key goals for the EPF when it comes to financial management. The first is Capital PRESERVATION.
[Image: jbqt7GjfHaFBAH.jpg]
“Paramount in the way we structure our assets is basically capital preservation. We cannot afford even a low risk in the loss of capital. Because of that, we carry a very high percentage of government debt and high grade corporate securities. When it comes to equities, we only invest in blue-chip companies and the larger companies because of liquidity,” says CEO Datuk Shahril Ridza Ridzuan.
[Image: jmYkBczSgKyV2.png]
It’s safety first for the EPF as it is responsible for managing and growing retirement savings of most Malaysians.
How Malaysia EPF Makes Money for Dividend Payment

(13-03-2014, 01:21 PM)opmi Wrote: UBS stake: holding period 20 years mah.....the rule "Market can stay irrational than you can stay solvent" dont really applies to GIC and TH.
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#7
I just read the vb thread on "NZ raises rates by 25bp to 2.75pc on back of 'rock-star economy' " where it was reported that a RBNZ governor signalled "today's rate rise was unlikely to be the last".

http://www.valuebuddies.com/thread-4768-...l#pid76989

Then I read the quote that ".....interest rates are typically higher in countries whose currencies have tended to depreciate over time, “because higher interest rates compensate for weaker currencies”......"


So does that mean NZD will become weaker over time or maybe NZD happens to be non-typical? I scratch my head.
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#8
5 to 20 years... Mmmm...
1) Try NOT to LOSE money!
2) Do NOT SELL in BEAR, BUY-BUY-BUY! invest in managements/companies that does the same!
3) CASH in hand is KING in BEAR! 
4) In BULL, SELL-SELL-SELL! 
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