Singapore's GIC portfolio - measuring returns

The following letter was sent to the Straits Times Forum on July 31. As of August 8, the letter has not been published.  

To the Editor:

Singaporeans welcome GIC's recent announcement to reveal additional information by providing five and ten year annual rates of return on its portfolio.

Based on published reports, it seems that GIC's portfolio information is reported to the media in US Dollars. Certainly, information on GIC portfolio returns for the period ended March 31, 2011 recently published by the media utilize US Dollars as the measurement currency.

GIC is a Singaporean entity. Singaporean businesses typically account for revenues and expenses in Singapore Dollars. Naturally, Singaporeans also measure investment returns in Singapore Dollars. Hence, it is unusual that GIC publicizes investment performance only in US Dollar terms.

In a world where exchange rate movements can add or subtract significantly from investment performance, GIC and the media should report portfolio analytics measured in Singapore Dollars. For Singaporeans, investment returns are more meaningful if reported in Singapore's national currency.

Sincerely,

Imran Ahmed

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Imran is a business and management consultant. Through his work at Deodar Advisors, Imran improves the profitability of small and medium sized businesses. He can be reached at imran@deodaradvisors.com.

Singapore: GIC’s Turn Under the Microscope

The Government of Singapore's Investment Corporation (GIC) released its latest 'annual report' yesterday. As GIC manages the country's reserves, the results are of interest to all Singaporeans.

The Government of Singapore's Investment Corporation (GIC) yesterday released its results for its financial year ended March 31, 2009

GIC must be lauded for making voluntary disclosures of selective information. Certainly many analysts will be reviewing the information in the coming days and weeks and one can expect a fair degree of scrutiny.

However, here are some preliminary questions that come to my mind.

1.   Given that the information released is general in nature there is no reason why it should not be released (say) two months after the end of the financial year.

2.   Yes, the global markets suffered and GIC's portfolio will inevitably suffer too. Yet, there is no comparative information provided by either the GIC report or the Straits Times article. Comparative perfo to place the GIC performance in context;

3.   Comparative performance of the MSCI World Index will help to place the GIC returns in context and help to assess the performance of GIC investment managers;

4.   The wording of GIC's risk-return objectives raise similar concerns as with Temasek, i.e. what specifically is a 'reasonable rate of return above global inflation, with due regard for risks, over an investment horizon of 20 years.' A clearly defined investment objective is indispensable.

Certainly, one can appreciate the government's desire to put a positive spin on GIC's investment performance. Nonetheless, having taken the decision to disclose a basic level of information it is necessary that the information be at least minimally useful to the general public.

The story should not end with the revelation of a SGD 59 billion dollar loss during the financial year ended March 31, 2009. The performance must be further dissected based on publicly available facts and figures.