REPORT

ON THE
MANAGEMENT
OF THE
GOVERNMENTS
PORTFOLIO
FOR THE YEAR
2014/15

2014 /15 HIGHLIGHTS

PERFORMANCE

APPOINTMENTS

RE TIREMENTS

GIC achieved a 20-year annualised real rate of return

of 4.9% for the financial year ended 31 March 2015.
We cannot expect this level of returns to continue. The
current high asset prices are likely to result in low
returns over the next 5 to 10 years.

Mr Teo Chee Hean was appointed Chairman of the

GIC International Advisory Board with effect from
8 April 2015. He was previously Deputy Chairman
and took over the chairmanship with the passing of
Mr Lee Kuan Yew.

Mr Ng Kok Song retired from the GIC International

Advisory Board on 10 February 2015, while Mr Quah
Wee Ghee retired from the GIC Investment Board on
11 April 2015. We thank both GIC veterans for their
contributions to GIC.

The results underline the point that to benefit from

long-term investing, we have to be prepared to tolerate
short-term unrealised losses.

Mr Choo Chiau Beng was appointed member of the GIC

Investment Board with effect from 28 April 2015.
Six new Managing Directors were appointed in July
2015 Mr Vincent Cheang, Ms Madeleine Cosgrave,
Mr Adam Gallistel, Ms Jennifer Lewis, Mr Eric Wilmes
and Mr Maverick Wong.

THE GIC PRIMER

Our responsibility is to preserve and enhance Singapores foreign reserves. People and talent are central
to what we can do. We believe that the results we seek are best achieved through a culture founded on
our five PRIME values of Prudence, Respect, Integrity, Merit and Excellence.

PRUDENCE
We exercise prudence and
sound judgement and take
a considered approach to
managing risks as we seek to
deliver sustainable, superior
investment returns, always
conscious of our overriding
fiduciary responsibility.
As an institution and as
individuals, we conduct
ourselves with good sense and
circumspection, even as we take
the best advantage of our large
asset base, global presence,
multi-asset approach and longterm orientation.

RESPECT

INTEGRIT Y

MERIT

E XCELLENCE

All of us are united in a common

endeavour, regardless of who we
are, where we work or what we do.
We respect people as individuals,
care for their well-being, and
welcome diversity in capability and
background. We do not tolerate
behaviour that works against the
interest of our clients or of GIC.

Everything we do is founded on
integrity. We expect the highest
standards of honesty from
everyone in GIC, both in our work
and in our personal lives. This
includes abiding by the laws of
the countries we invest in, and
observing our code
of ethics in letter and in spirit.

We stress teamwork within and

across departments, and with
our clients and business partners.
We expect everyone to be free,
candid and constructive in their
comments and suggestions, and
always seek to help our colleagues
and GIC do better.

We must never jeopardise the

trust others have in us and in our
reputation for professionalism.

We recruit and develop our

people solely on merit. We draw
our talent from around the
world and provide challenging
and meaningful work. We grant
recognition and reward based
on performance and conduct
consistent with our PRIME values.
We develop our people to achieve
their potential so that we may
also perform to our potential.

We are relentless in our pursuit

of excellence. In all that we do, we
strive to be the best that we can
be. This demands that we plan
and anticipate well, so that we will
always be in time for the future,
fully able to take up the challenges
and opportunities that come,
pursuing improvements where
they may be found, and economies
where these may be gained.

We select business partners

based on their capability.
We believe in long-term
relationships built upon high
levels of performance and
quality of service.

We expect everyone to do his

best in every situation. We
harness the creativity and
imagination of our people and
our business partners for
sustainable, superior results.

THE GIC WAY

The GIC Way is a set of principles that defines the way we think and act. It sharpens
our focus on our client, our commitment to people and our future. The PRIME Values
acts as our compass having a good compass enables us to get back to our
fundamental purpose and beliefs, especially when we are faced with situations we
have not come across before.

CLIENTS
FIRST

PEOPLE
THE KE Y

FUTURE
NOW

When our Clients do well, we do well

Do whats right, not whats easy

Tomorrow is determined today

Never compromise our PRIME values and

reputation; not even for better returns

Help GIC make the best decisions. Speak up if you

have a different view

Build leadership and resources for the future

Always follow GICs investment principles (5Ps):

Attract exceptional people and develop them to their

full potential

Pursue intrinsic value and maintain price

discipline

Insist on nimble and responsive structures

and processes

Embolden innovation and encourage learning

Practise long-term investing

Pick our spots: be focused and leverage our

strengths

Pay attention to risk control

Empower decision-making at every level

Prepare for the future

Work seamlessly across boundaries and hierarchy

OneGIC

Reward what matters: contribution; not pedigree,

age, gender or nationality
Excel in what you do; make a difference

CONTENTS

17

28

34

60

OVERVIEW
BY GROUP PRESIDENT
AND GROUP
CHIEF INVESTMENT
OFFICER

INVESTMENT REPORT

MANAGING THE PORTFOLIO

FEATURE ARTICLE
ON REAL ESTATE

GOVERNANCE

OUR PEOPLE

OVERVIEW

By
Group President and
Group Chief Investment Officer

OVERVIE W BY GROUP PRESIDENT & GROUP CHIEF INVESTMENT OFFICER

This year marks Singapores 50 years of independence.

in interest rates to historic lows in most advanced

Our nations reserves built up over the years serve as a

economies has caused prices of a broad range of asset

critical defence for Singapore in times of crisis.

classes to rise. The sharp rise of asset prices, when the

global economy is still struggling to gain a firm foothold,

GIC achieved a 20-year annualised real rate of return

makes the investment environment particularly uncertain

of 4.9% for the financial year ended 31 March 2015 for

and unpredictable.

the portfolio of foreign reserves that we manage for

the Singapore Government. In USD nominal terms, the

The current high asset prices are likely to result in

portfolio generated an annualised return of 6.1% over the

low returns over the next 5 to 10 years. The path is

20 years ended 31 March 2015. The Investment Report

also expected to be volatile, given the challenges that

explains in more detail the investment performance and

policymakers are likely to face in exiting from their

how it compares against our Reference Portfolio.

extraordinary policy measures, plus changes in market

structure that could amplify market moves. Our globally

While we present some shorter-term performance

diversified portfolio allows us to withstand short-term

figures, these are purely for information as GICs

market volatility.

mission is to invest so as to generate good returns

over and above global inflation in the long term. GICs

GIC is the manager of the Governments foreign financial

investment strategies and actions are therefore targeted

reserves. The investment returns of GIC, the Monetary

at growing the long-term value of the Governments

Authority of Singapore and Temasek Holdings contribute

assets it manages.

to the Net Investment Return Contribution (NIRC) for

purpose of spending in the budget, based on the rules set

Global equities, particularly in the US, have experienced

out in the Singapore Constitution. The NIRC has averaged

outsized returns over the past five years. This has

about S$8 billion per year over the last five years. It

occurred against a backdrop of initial low valuations

complements domestic revenues in financing Singapores

and extraordinary monetary policy easing to deal with

economic and social priorities.

the aftermath of the Global Financial Crisis. The fall

OVERVIE W BY GROUP PRESIDENT & GROUP CHIEF INVESTMENT OFFICER

We mourned the loss of Mr Lee Kuan Yew, our Founding

deeper insight and intelligence to enhance investment

Chairman who passed away on 23 March 2015. Mr

decision-making. The Portfolio Execution Group, headed

Lee was Chairman of GIC from its inception until his

by Mr Tung Siew Hoong, brings together teams involved

retirement in May 2011, after which he took on the mantle

in trade execution, treasury and currency hedging, asset

of Senior Advisor and Chairman of the GIC International

rebalancing, passive replication and trade completion

Advisory Board. We had benefitted greatly from his

functions. This new group serves an important role in

leadership, guidance and insights.

our new investment framework by enabling alpha-beta

separation and total portfolio management.

Mr Teo Chee Hean was appointed Chairman of the GIC

International Advisory Board with effect from 8 April

This is the jubilee year for Singapore. We celebrate

2015. He was previously Deputy Chairman and took over

with all GICians the spirit of creativity and enterprise,

the chairmanship with the passing of Mr Lee.

the boldness to try, and the courage to be different,

all of which have made Singapore what it is today. We

Mr Choo Chiau Beng was appointed member of the GIC

continually enhance our investment processes and

Investment Board with effect from 28 April 2015. Mr Choo

operations so that we can stay on top of our game and

is the senior advisor to the Board of Keppel Corporation

invest well for the nation.

and brings with him strong business instincts and

experience in international businesses.
Mr Ng Kok Song retired from the GIC International
Advisory Board on 10 February 2015, while Mr Quah
Wee Ghee retired from the GIC Investment Board on
11 April 2015. We thank both GIC veterans for their
contributions to GIC.
GIC set up two new departments on 1 April 2015. The
Data and Analytics Department, headed by Mr Choy

LIM SIONG GUAN

LIM CHOW KIAT

Siew Kai, will harness total GIC data and knowledge for

Group President

Group Chief Investment Officer

INVESTMENT REPORT

GICs mandate is to
achieve good long-term
returns. The primar y
metric for evaluating
GICs investment
per formance is the
rolling 20-year real
rate of return.

ANNUALISED ROLLING 20-YEAR REAL RATE OF RETURN FOR THE

GIC PORTFOLIO SINCE 2001
%

7
20-YEAR REAL RATE OF RETURN

6
5
4
3
2
1
0

Year ended 31 Mar

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

INVESTMENT REPORT

LONG-TERM INVES TMEN T PERFORMANCE

Over the 20-year period that ended 31 March 2015, the

INVES TMEN T APPROACH

GICs mandate is to achieve good long-term returns.

GIC Portfolio generated an average annual real return of

A long-term investment approach offers several

The primary metric for evaluating GICs investment

4.9% (Figure 1) above global inflation. This surpasses the

advantages. It allows GIC to be contrarian in the face

performance is the rolling 20-year real rate of return.

portfolios 20-year annualised real rate of return of 4.1%

of short-term market sentiment, and reap higher long-

The goal is expressed in real terms because GIC must,

for the preceding year. In nominal USD2 terms, the portfolio

term returns by assuming illiquidity risk. As such, our

at a minimum, beat global inflation and preserve the

generated an annualised return of 6.1% over the 20 years

investments in private equity, for example, enhance the

international purchasing power of the reserves placed

ended 31 March 2015. This means that US$100 invested

long-term returns of the GIC Portfolio.

under its management.

with GIC in 1995 would have grown to US$327 today.

GICs long-term performance reflects three main factors.

First, the dynamics of the global economy. Second, the

FIGURE 1: ANNUALISED ROLLING 20-YEAR REAL RATE OF RETURN FOR THE

GIC PORTFOLIO SINCE 2001

performance of various asset classes, which we capture

via our asset allocation strategy. Third, the performance

of skill-based strategies undertaken by the various active

strategy investment teams. For a given level of risk, we

strive to optimise the GIC Portfolio to achieve the best

20-YEAR REAL RATE OF RETURN

possible long-term return for a variety of economic

scenarios. Our investment approach, including the new

investment framework that was implemented in 2013,

is elaborated in the chapter on Managing the Portfolio.

3
2
1

Year ended 31 Mar

0
2001

1
2

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

The real return number is independent of the currency used to compute it.
The nominal rates of return have been reported in USD terms since our 2009 report as the USD is the most common currency base for publishing global investment returns.

10

INVESTMENT REPORT

EFFEC T S OF GLOBAL INFL ATION

at a faster pace than inflation, and earn a real return of

Inflation is the rate of increase in general prices for goods

about 5% per annum. This means that the purchasing

and services. To understand the cumulative impact of

power of your investment will increase over time, that

inflation on investment over a long time horizon, consider

is, in the future, more than one of the same item can be

the following example. If inflation was 2% per annum, the

bought with the invested amount. By investing steadily

same item that costs $1 today will cost $1.02 a year later,

at approximately 5% 3 real return over 40 years, your

$1.49 in 20 years, and $2.21 in 40 years. This is because

investment at the 40-year point will be able to purchase

inflation causes price levels to rise, and more dollars will

more than 6 times the number of items compared with

be required to buy the same item in the future. Suppose

an investment at the inflation rate. This shows the

you invest $1 today, at a nominal return of 7% per annum.

importance of investing to generate a good real rate of

The $1 invested with nominal returns of 7% will grow

return over the long term.

Real return refers to the return realised on an investment which is adjusted for changes in price levels due to inflation. In this example, the $1 invested today at a 7% nominal rate of return will grow to $14.97 in 40 years
time. With 2% inflation, price levels in 40 years time will be 2.21 times higher than what they are today. Thus, the investment will have generated a real return of 4.9% (or about 5%) per annum over this period, i.e. real
return (%)={[1+nominal return] / [1+inflation rate] - 1} *100

11

INVESTMENT REPORT

THE GIC PORTFOLIO

TABLE 1: ASSET MIX OF THE GIC PORTFOLIO

Each asset class carries a different risk profile. Growth

31 MARCH 2015 (%)

31 MARCH 2014 (%)

also come with higher risk. Defensive assets such as

Developed Markets Equities

ASSET MIX

29

29

sovereign bonds offer lower returns, but have lower

Emerging Markets Equities

18

19

risk and protect the portfolio in market downturns. GIC

Nominal Bonds and Cash

32

31

constructs a diversified portfolio to benefit from the

Inflation-Linked Bonds

distinct characteristics of the different asset classes.

Real Estate

Private Equity

100

100

assets such as equities generate higher returns, but

Table 1 and Table 2 show the asset mix and geographical

Total

distribution of the GIC Portfolio as of 31 March 2015.

TABLE 2: GEOGRAPHICAL DISTRIBUTION OF THE GIC PORTFOLIO
GEOGRAPHICAL DISTRIBUTION
Americas

Europe

Asia
Australasia
Total

31 MARCH 2015 (%)

31 MARCH 2014 (%)

United States

34

34

Latin America

Others

United Kingdom

Eurozone

12

Others

Japan

10

North Asia4

15

Others

43

42

4
8
25

14

29

7
10
30

14

27

100

100

100

100

China, Hong Kong, South Korea and Taiwan

12

INVESTMENT REPORT

IN TERMEDIATE AND LONG-TERM INVES TMEN T

PERFORMANCE

TABLE 3: PERFORMANCE AND VOLATILITY OF THE GIC PORTFOLIO AND REFERENCE PORTFOLIO

Table 3 shows the performance of the GIC Portfolio

alongside the Reference Portfolio5 and looks at
investment returns in the context of risk as defined by

TIME PERIOD

annualised volatility. As the historical risk profile of the

GIC Portfolio has evolved over time, and the Reference
Portfolio has only been adopted from 1 April 2013, the
historical comparison serves only an illustrative purpose
as GIC was not operating with the Reference Portfolio in

Annualised nominal return6 (USD)

for period ended 31 March 2015
GIC Portfolio

Reference Portfolio

20-Year

6.1%

10-Year

6.3%

5-Year

6.5%

Annualised volatility
for period ended 31 March 2015
GIC Portfolio

Reference Portfolio

6.9%

9.0%

10.8%

6.1%

10.0%

11.7%

7.2%

9.0%

10.3%

our earlier years.

GICs 20-year nominal return was 6.1% per annum in
USD terms, while that of the Reference Portfolio was
6.9%. The two are strictly not comparing like for like,

To give a sense of on-going portfolio performance, we

In the last decade, GIC significantly increased its

as until about 10 years ago, the asset allocation of the

provide the nominal rates of return in USD terms over

exposure to public equities and alternative asset classes

GIC Portfolio had a significantly higher percentage of

5- and 10-year periods. While these investment results

while reducing its allocation to bonds. The GIC Portfolio

bonds and cash, thus resulting in lower returns than the

serve as medium-term trackers of how GICs 20-year

returned 6.3% per annum in USD nominal terms over the

Reference Portfolio. GICs lower risk profile over 20 years

results are evolving, the 20-year period remains the right

10-year horizon, and performed slightly better than the

is indicated by the lower volatility for the portfolio at 9.0%,

time horizon to assess the performance of the portfolio,

Reference Portfolio.

while that of the Reference Portfolio was 10.8%.

given GICs long time horizon.

5
6

The Reference Portfolio comprises 65% global equities and 35% global bonds, and reflects the risk that the Government is prepared for GIC to take in its long-term investment strategies. For more details, please refer to
the chapter on Managing the Portfolio.
The GIC Portfolio rates of return are computed on a time-weighted basis, net of costs and fees incurred in the management of the portfolio. However, the Reference Portfolio rates of return are provided on a gross basis,
i.e. without adjustment for costs and fees.

13

INVESTMENT REPORT

Over the last 5-year period, the GIC Portfolio returned

benefit from the sustained structural improvements

6.5% per annum in USD nominal terms. Significant year-to-

in emerging economies. This is in spite of the fact

year variations in returns over a shorter time period are not

that emerging market equities have under-performed

unexpected, given the volatile nature of financial markets

developed market equities over the past few years.

and GICs investment strategy which is focused on the

long term. In the last 5 years, developed market equities,

GIC can only benefit from long-term investing if it is

especially those in the US, have done particularly well.

prepared to tolerate short-term unrealised losses or

underperformance relative to the market from time

The GIC Portfolio has relatively less developed market

to time, in order to generate good real returns over

equities because we have diversified into other asset

the long term.

classes, in particular emerging market equities and

private markets. We expect these assets to contribute

The GIC Portfolio was less volatile than the Reference

positively to the GIC Portfolio over the long term. For

Portfolio over all three time periods, which reflects

example, we believe that emerging market equities will

lower risk assumed for the GIC Portfolio.

5
6

The Reference Portfolio comprises 65% global equities and 35% global bonds, and reflects the risk that the Government is prepared for GIC to take in its long-term investment strategies. For more details, please refer to
the chapter on Managing the Portfolio.
The GIC Portfolio rates of return are computed on a time-weighted basis, net of costs and fees incurred in the management of the portfolio. However, the Reference Portfolio rates of return are provided on a gross basis,
i.e. without adjustment for costs and fees.

14

INVESTMENT REPORT

INVES TMEN T E XPEC TATIONS FOR COMING YE ARS

as much. Current valuations are high, given the strong

The challenge posed by high current valuations, low

In response to the Global Financial Crisis (GFC) of 2008

performance across major asset classes in the past 5

starting yields and low potential future returns is

to 2009, central banks worldwide cut interest rates and

years, and this portends lower expected returns over

common to all major asset classes: public equities,

utilised unconventional policies such as quantitative

the next 10 years. For example, the cyclically-adjusted

private equity, bonds and real estate. Therefore, the

easing and forward guidance to provide liquidity and

earnings yield for US equities has fallen from 7.5%

investment environment over the next 10 years is

stimulate their economies. This has supported asset

during the GFC to 4.0% at end May 2014, and further to

expected to be more difficult for all investors. Even over

prices, resulting in strong risk asset returns since 2009.

3.7% at end May 2015. Historically, there tends to be a

a longer time horizon of 20 years, we expect the real

In particular, developed market (DM) equities especially

relationship between earnings yield and the subsequent

return for both the Reference Portfolio and the GIC

in the US have experienced higher than expected

10-year returns. The lower the earnings yield, the lower

Portfolio to be more modest than history.

returns over the past 5 years against a backdrop of initial

the subsequent 10-year returns tend to be. Similarly, a low

low valuations and extraordinary monetary policy easing.

interest rate environment in major economies coupled with

low bond yields point to lower prospective income returns

While asset prices have risen strongly, the outlook for

and capital gains on bond investments respectively,

economic growth and earnings has not improved by

resulting in lower expected returns on fixed income assets.

15

INVESTMENT REPORT

Building a Resilient Portfolio

FIGURE 2: DISTRIBUTION OF SIMULATED 5- AND 20-YEAR ANNUALISED

REAL RETURNS OF THE REFERENCE PORTFOLIO

While GIC cannot avoid taking market risk, it is important

that the GIC Portfolio does not take on excessive risk
in pursuit of investment returns. Figure 2 shows the
distribution of the simulated7 5- and 20-year annualised
real returns of the Reference Portfolio. Figure 2
illustrates that, depending on the dynamics of the global
economy and capital markets, there is a wide dispersion

PROBABILITY 0.20
DENSITY
0.15

20-year
annualised returns

around the expected annualised returns.

5-year
annualised returns

0.10
Because the future is uncertain, the GIC Portfolio
has to be resilient across a broad range of plausible
economic conditions. This is accomplished by putting

0.05

together a portfolio that is diversified and benefits from

the way different assets respond to possible market
and economic conditions. By spreading the investment
of funds across asset types, geographical regions,

SIMULATED ANNUALISED RETURNS (%)

-15

-10

-5

10

15

20

25

industries, and companies, the GIC Portfolio is more

diversified than the Reference Portfolio and less sensitive

a diversified asset mix puts us in better stead to benefit

As the GIC Portfolio seeks to deliver good long-term

to equity market volatility.

as we move through market cycles. The GIC Portfolio

real returns, its construction process is agnostic about

would have experienced lower drawdowns and swifter

the short-term behaviour of the Reference Portfolio.

The task of diversifying has become more complex in

recoveries compared to the Reference Portfolio during

While we are confident about the long-run expected

recent times as the behaviour of financial assets has

past market crashes, such as during the GFC and Dot-

performance of the GIC Portfolio, we do not construct the

become more correlated. Nonetheless, we believe that

Com bust. We expect this to be true in the future .

GIC Portfolio with the aim of outperforming the Reference

Portfolio over short periods.

7
8

Based on a Monte Carlo simulation. While it is not meant to be predictive, it provides a sense of the portfolios future returns over different time horizons.
This is based on the bottom decile of 5-year cumulative return of the Reference Portfolio and the GIC Portfolio using Monte Carlo simulation.

16

MANAGING THE PORTFOLIO

GICs mission is to
preser ve and enhance
the international
purchasing power of
the financial reser ves
of Singapore under
our management.

REFERENCE PORTFOLIO
Passive alternative portfolio: set at 65% global equities, 35% global bonds
Consistent with the Clients risk tolerance

POLICY
PORTFOLIO

ACTIVE
PORTFOLIO

GIC
PORTFOLIO

Allocation among six

core asset classes

Comprises overlay of alpha

(i.e. active, skill-based strategies)

Represents actual exposures

of GIC Portfolio

Key driver of returns over

the long term

Adopted by GIC Management

Within risk limits set by

the Client

Approved by GIC Board

Overseen by
GIC Investment Board

MANAGING THE PORTFOLIO

INVES TMEN T FR AME WORK

A key driver of returns is the long-term asset class risk

asset classes in the Policy Portfolio. Our Client, the

In response to the changing investment environment

premia. GIC harvests these long-term risk premia via our

Singapore Government, has also specified a global

which requires better responsiveness and greater

Policy Portfolio. The Policy Portfolio comprises six asset

equity-bond portfolio as the Reference Portfolio. This

flexibility, a new Investment Framework was

classes, and the allocation among these asset classes is

expresses their risk preference as GIC exercises its

implemented on 1 April 2013. This revised investment

approved by the GIC Board. In addition, active investment

best efforts to obtain optimal investment results over

framework enables us to better harvest long-term risk

strategies, as embodied by the Active Portfolio, seek

the long term.

premiums, manage risk, take advantage of investment

to outperform the Policy Portfolio within risk limits

opportunities in a more volatile environment, and

set by the GIC Board. These strategies pursued by GIC

The investment framework sets out clearly the

strengthen our ability to add value. Under this framework,

Management involve selecting investment opportunities

responsibilities across GIC. In the following sections,

the GIC Portfolio is made up of two parts, each with a

within each asset class, as well as investing in cross-

we describe the management and governance of our

distinct role in driving our performance.

asset class strategies which involve going beyond the

portfolio in light of the framework.

REFERENCE PORTFOLIO
Passive alternative portfolio: set at 65% global equities, 35% global bonds
Consistent with the clients risk tolerance

POLICY
PORTFOLIO

ACTIVE
PORTFOLIO

GIC
PORTFOLIO

Allocation among six

core asset classes

Comprises overlay of alpha

(i.e. active, skill-based strategies)

Represents actual exposures

of GIC Portfolio

Key driver of returns over

the long term

Adopted by GIC Management

Within risk limits set by

the Client

Approved by GIC Board

Overseen by
GIC Investment Board

18

MANAGING THE PORTFOLIO

REFERENCE PORTFOLIO:
PASSIVE MARKE T INDE X

The Reference Portfolio comprises 65% global equities

Over the past 50 years, the 65:35 global portfolio has

and 35% global bonds (65:35), a generally accepted

recorded good long-term returns despite the bouts of

passive alternative for a large global investor such as

market stress, and in fact tends to perform well during

GIC, and consistent with the Singapore Governments

periods when developed markets rally strongly (e.g. 2009

risk tolerance. The proportion of equities versus bonds

till present) due to its relatively large developed market

broadly determines how much of a decline in market

equity content. That said, the Reference Portfolio is not

value a portfolio could face in times of market stress: the

a short-term performance or investment benchmark for

greater the proportion of equities, the higher the decline.

GIC. We can only benefit from long-term investing if we

At the same time, the higher the proportion of bonds, the

are prepared to tolerate short-term unrealised losses, or

lower the projected return of the portfolio over the long

underperformance relative to market indices from time to

term. For instance, historically, a 65:35 global portfolio

time. GIC does not seek to track the Reference Portfolio;

experienced losses of 20% to 30% over rolling three-

GICs investment strategy is to invest in assets that

year periods during periods of market stress such as the

deliver good sustainable returns. This approach leads to

Tech Bubble Crash (200103) and Global Financial Crisis

deviations from the Reference Portfolio but is necessary

(200809). However, these declines were not permanent.

for better investment results in the long term.

19

MANAGING THE PORTFOLIO

11-15%

Private equity

20-30%
9-13%

Developed market equities

Real estate

4-6%

Inflation-linked bonds

25-30%

Nominal bonds and cash

15-20%

Emerging market equities

Policy Portfolio with effect from 1 April 2013

POLICY PORTFOLIO:
KE Y INVES TMEN T DRIVER

The Policy Portfolio stands at the core of the investment

The Policy Portfolio should not be adjusted frequently and,

framework. The Policy Portfolio aims to achieve good

in particular, not in response to market cycles. However,

sustainable returns through diversification and careful

it may be adjusted when needed to take into account

portfolio construction that takes into account the way

fundamental, structural changes in the global investment

different asset classes respond to various economic

environment, such as a secular shift in the expected risk

environments. The six asset classes in the Policy Portfolio

and return of a particular asset class. Adhering to a long-

are Developed Market Equities, Emerging Market Equities,

term Policy Portfolio allows GIC to take advantage of

Nominal Bonds and Cash, Inflation-linked Bonds, Private

time-varying risk premia, and a critical means by which we

Equity and Real Estate. These asset classes represent the

do this is a disciplined rebalancing of the Policy Portfolio.

key systematic or market risks, and encapsulate the bulk of

This involves systematically buying more of the assets

the long-term risk and return potential of the GIC Portfolio.

that have fallen in value, and selling some of the assets

that have risen in value to keep the asset mix steady over

The process of designing the Policy Portfolio starts

time. Numerous studies have shown that in the long run,

with analysis and groundwork by the Economics and

a portfolio that is rebalanced regularly to its predefined

Investment Strategy Department. The recommendations

target allocations tends to outperform a portfolio whose

are discussed with the Investment Strategies Committee.

allocations are allowed to drift.

Once endorsed, they are submitted to the Board for

approval as the policy asset allocation of the portfolio
under management.
20

MANAGING THE PORTFOLIO

AC TIVE PORTFOLIO:
COMPRISES SKILL-BASED S TR ATEGIES

The GIC Board provides management the latitude to adopt

In effect, our investment framework allows us to derive

active investment strategies aimed at adding value to the

better returns by substituting passive investments

Policy Portfolio. These active strategies operate within

in policy asset classes with active strategies without

risk limits set by the GIC Board. Management decides

introducing additional systematic or market risk to the

on how the overall risk budget is allocated among the

portfolio. This approach also allows strategies to be

active strategies.

funded by a combination of policy asset classes.

When GIC undertakes skill-based strategies, GIC

Management assigns a cost of capital for each strategy.
The cost of capital takes into account the returns
that GIC would have otherwise earned by investing
passively in Policy Portfolio assets that reflect the risk
characteristics of the strategy. It also incorporates an
estimate of the additional risk undertaken by the skillbased strategy. In order to add value commensurate with
the risk undertaken, each active strategy has to generate
a return above its cost of capital.

21

MANAGING THE PORTFOLIO

GOVERNANCE OF THE INVES TMEN T FR AME WORK

The table below summarises the responsibilities within

The investment framework clearly defines the different

GIC under the investment framework. Taken as a whole,

risk and return drivers for GIC in the long run, and

our investment framework capitalises on GICs strengths.

further clarifies the responsibilities of the GIC Board and

These include the ability to take a long-term investment

Management. The Reference Portfolio is consistent with

perspective; capabilities in public and private markets

the Singapore Governments risk appetite, while the GIC

and the potential to synergise these to invest in cross-

Board approves the Policy Portfolio which is expected to

asset opportunities; presence in all major geographies;

deliver good sustainable returns over the long term. GIC

a skilled and experienced talent pool; and a governance

Management is given the discretion to add value within

structure that clearly distinguishes the responsibilities

the risk limits set by the GIC Board through the Active

of the GIC Board and Management.

Portfolio which comprises active, skill-based strategies.

The Investment Board (IB) provides additional and

Responsibility

independent oversight on GICs active investment

GIC Board

Approves Policy Portfolio and active risk budget

management and process. It comprises individuals

Investment Strategies Committee

Reviews GIC Managements recommendations on Policy Portfolio and active risk budget

drawn from the private sector, some of whom are not

Investment Board

Oversees GIC Managements active strategies

GIC Management

Recommends Policy Portfolio and constructs Active Portfolio

Investment Teams

Add value through implementation of Policy Portfolio and active strategies

members of the GIC Board. They collectively bring a

wealth of experience in different types of investments in a
range of geographies. A critical role of the IB is to ensure
that GIC invests in a sound and disciplined manner.

Responsibilities within GIC under the Investment Framework

Additionally, the IB ensures that GIC does not take on

undue reputational risk in our pursuit of good investment
opportunities. GIC inevitably has significant positions in
various companies. Special attention will be paid to such
large investments.

22

MANAGING THE PORTFOLIO

IMPLEMEN TATION

Investment Groups in Public and Private Markets

Public Equity Group

Our core investment groups underpin the investment

GIC invests in both public and private markets. In public

GIC pursues active management strategies in equity

organization at GIC: Fixed Income, Public Equity,

markets, we invest in public equity in both developed and

investing. We have an established team of in-house

Private Equity & Infrastructure, and Real Estate. In

emerging markets, absolute return strategies (hedge

research analysts and experienced portfolio managers.

addition, our Integrated Strategies Group evaluates

funds), fixed income, cash and currencies. We manage a

They conduct in-depth due diligence and research

and invests in cross-asset investment opportunities.

well-diversified portfolio to produce sustained, superior

that enable us to identify undervalued stocks with the

We separate active skill-based alpha strategies from

risk-adjusted performance. In private markets, our

potential to generate good returns over the long term.

beta activities at GIC to enable greater effectiveness and

allocation to alternative asset classes stems from their

Our investment professionals have a wide network of

efficiency. Our focus for beta activities is to

potential to generate high long-term real returns and

corporate and industry contacts with diverse insights on

achieve cost and operational efficiencies. For alpha,

their role to diversify the portfolio. Real estate assets, in

companies in the investment universe.

our focus includes enhancing collaboration to tap

particular, also serve as a hedge against inflation.

Fixed Income Group

GIC-wide expertise to access investment opportunities

and execute major investments which are not

GICs long investment horizon puts us in a good position

Fixed income investments aim to generate steady

straightforward in their construction.

to exploit market inefficiencies through the active

returns, provide a liquidity reserve to support portfolio

management of these assets.

management activities, and enhance capital preservation

We are open to investing in all countries outside of

through diversification. Our portfolio managers employ

Singapore, but do not invest in countries that are subject

a range of investment strategies in managing fixed

to United Nations Security Council sanctions. We exercise

income investments including yield curve analysis, credit,

ownership rights in our investments to protect the

interest rate duration and currency management to add

financial interest of our Client.

value to the portfolio.

23

MANAGING THE PORTFOLIO

Real Estate Group

capital and special situations such as mezzanine debt,

efforts by the business groups and leveraging GICs

GIC is an early entrant among institutional investors in

distressed debt and secondary fund investments. We

competitive advantages, ISG oversees a more flexible

real estate. Investments include traditional private real

invest in companies directly and through funds. The

and collaborative investment approach across product

estate (brick-and-mortar assets), public equities (such as

direct investment programme is focused on taking

types, public and private markets, as well as capital

real estate operating companies), real estate investment

minority equity positions and providing mezzanine

structure. The key functions of ISG include the evaluation

trusts and real estate-related debt instruments. The real

financing in buyouts. Our funds strategy aims to identify

and development of thematic investment strategies and

estate assets span multiple property sectors, including

and invest with leading private equity and venture capital

complementary product ideas; supplementing GICs

ofce, retail, residential, industrial and hospitality.

funds globally, and grow with them in the long run. We

efforts in sourcing and executing investments across

have built up a network of over 100 active fund managers.

asset classes; as well as building and strengthening our

Real estate investing is pursued through a rigorous

The investment teams add value to the boards and

relationships with external parties, including the senior

investment analysis, underwriting and approval process

management of the investee companies by providing

management of major corporations and business groups.

to ensure the portfolio meets both investment and

advice and access to a global network of business links.

risk objectives. Asset-specific conditions and risk are

For more information, you may refer to last years feature

Portfolio Execution Group

among the factors that inuence investment decisions.

article on Private Equity.

The Portfolio Execution Group (PEG) was established

recently under our revised investment organization

GIC actively manages the assets to generate income

and enhance market value through tenant management,

In Infrastructure, GICs primary strategy is to invest

structure to enable more efficient beta replication

market positioning, leasing and capital improvements.

directly in operating infrastructure assets with a

on passive portfolio management. PEG comprises

In this team-based approach, an appropriate range

high degree of cash flow visibility and which provide

functions such as trade execution, treasury and currency

of real estate and capital market skills is applied to

a hedge against inflation. These include mature,

management, asset rebalancing, passive replication and

each investment.

low- to moderate-risk assets in developed markets,

trade completion.

complemented by investments with higher growth

Our feature article on Real Estate, elaborates on GICs

potential in emerging markets.

Investment Clusters
We also have investment clusters focusing on Equity,

strategies for this asset class. Feature articles in

previous Annual Reports provide insights into GICs

Integrated Strategies Group

Funds, Macro and Credit which work across these

investment considerations.

The Integrated Strategies Group (ISG) aims to enhance

investment groups to extract synergy efficiently and

our alpha-generating capability and capacity by

effectively, and capitalise on our unique multi-asset

Private Equity & Infrastructure Group

approaching cross-asset investment opportunities

class capability.

GICs private equity universe includes buyouts, venture

from a GIC-wide perspective. Through supplementing

24

MANAGING THE PORTFOLIO

E X TERNAL MANAGERS

MANAGING PERFORMANCE

RISK MANAGEMEN T

GIC partners top-tier fund management institutions that

Our investment managers are fully accountable for

The Singapore Government, as owner of the funds,

offer access to opportunities, specialised capabilities,

portfolio performance while their investing decisions

determines the risk tolerance which GIC must work

in-depth analysis and experience which complement our

must comply with the prescribed guidelines and limits of

within to achieve the optimal investment returns possible

internal management capability.

our Investment Mandate.

for various market environments. The ultimate outcome

We invest in a variety of funds including real estate

We evaluate our performance in various ways: Whether

conscious culture built on an ownership mind-set and

funds, private equity funds, bond funds, index funds

we achieve a good rate of return above global inflation

discipline in risk-taking.

and hedge funds. In addition to the portfolios managed

for the total portfolio; how the total portfolio performs

within GIC, we give external fund managers discretionary

relative to the Reference Portfolio over a long horizon;

Each operating unit in GIC is responsible for actively

mandates in a wide range of asset classes such as global

and how each investment professional and team

managing the risk inherent in its activities.

xed income and global equities, while remaining fully

performs against their cost of capital as well as their

accountable for overall performance of the portfolio.

peers in the industry.

We regularly assess our external managers relative to

Our performance measurement is focused on longer-

reports to Director, RPMD, who in turn reports to the

expected returns, risks and guidelines.

term investment results, based on a disciplined and

Chief Risk Officer (CRO). RPMD provides the checks and

rigorous investment and risk management process.

balances and oversees risk-taking activities. Its work

of an effective risk management framework is a risk-

The Risk and Performance Measurement Department

(RPMD) is an independent control function in GIC which

ensures that risks assumed are in line with the mandate

and appetite of GIC.
Our approach to risk management is three-pronged:
Managing portfolio risk to ensure that risk taken is
consistent with our mandate and commensurate with the
expected returns; managing process and infrastructure
risk so that investment decisions are implemented
properly; and managing people risk.
For more information on GICs governance, please refer
to the Governance section of this report.
25

MANAGING THE PORTFOLIO

MANAGING PORTFOLIO INVES TMEN T RISK

RPMD conducts regular monitoring of the strategies

highlights potential changes in risk-taking behaviour

The Policy and Active Portfolios are constructed with

to ensure adherence to the investment thesis and

and inconsistencies with the stated risk and return

the Singapore Governments long-term real return

consistency with funding assumptions. In addition to

assumptions. Information systems are used to monitor

objective and its primary risk tolerance, an ex-ante stress

the semi-annual review of strategies, RPMD will have

and evaluate risk criteria, trading limits and investment

loss requirement, in mind. Deviation of asset allocation

regular dialogues with strategy teams to discuss risk and

guidelines within each managed portfolio. Portfolio

exposure from policy benchmarks is constrained by

performance-related issues of the strategies.

managers and senior management obtain timely

GIC Board-approved operating bands and GIC Board-

feedback on the risk profiles of our investments through

approved active risk budget. The operating bands

The active risk budget is supplemented by a set of

around the Policy Portfolios target weights are applied

investment guidelines and risk measurements to ensure

and monitored by RPMD. GIC Management is given the

that the essence of the Policy Portfolio is preserved and

A group-wide investment authorisation framework sets

discretion to deviate from the Policy Portfolio within an

to limit concentration risk, as well as other risks that

out the approving authorities for investments based

approved active risk budget. A cost-of-capital framework

are not fully reflected in our standard risk measures. A

on size, and subjects large investments to additional

is implemented to set an appropriate performance hurdle

variety of risk measures across different time horizons

review by the IB. Investment teams in private market

for each active strategy that includes the cost of funding

are used to quantify the risks within the GIC Portfolio.

asset classes conduct extensive due diligence covering

these strategies and a premium for additional

These include a mix of statistical and non-statistical

the market, physical, legal and financial aspects of

risk undertaken.

measures, as well as relative and absolute measures.

transactions, as well as the selection of investment

performance and risk attribution tools.

partners, holding structures, and exit strategies.

Policies, guidelines and processes are established to

Stress tests are conducted across a combination of

Measurement and operational risks associated with the

ensure consistency and clarity across the firm, while

both historical and forward-looking scenarios. These

performance of private market assets are managed via

reducing the likelihood of significant unexpected losses

provide a basis to determine how extreme yet plausible

operational and financial controls.

to the assets under management. The policies and

macroeconomic and geopolitical events may impact

guidelines translate our investment mandate and the risk

the portfolio, helping GIC to identify and manage

The investment and operations teams work closely

management principles into expectations and standards

potential vulnerabilities.

with the Legal and Compliance Department to manage

that guide our day-to-day activities. Vigorous processes

legal and regulatory compliance risks arising from

are implemented to enable GIC to identify, measure,

RPMD independently sets and monitors performance

the groups investment activities. The in-house legal

report, monitor and mitigate all the risks that are

and risk review thresholds to highlight instances of

team also works with external lawyers to address

assumed, compensated or uncompensated.

unusually large portfolio underperformance. RPMD also

legal risks.

26

MANAGING THE PORTFOLIO

MANAGING PROCESS & INFR AS TRUC TURE RISK

prices and system downtime. These indicators highlight

Staff must handle confidential and non-public information

All investment and operations staff are required to

potential risk areas that need to be addressed in a timely

with due care. These guidelines are set out in our

identify, evaluate, manage and report risks in areas of

manner in order to mitigate the risk of loss resulting from

compliance manual, which is maintained by the Legal

responsibility, as well as to comply with established risk

possible slippages in GICs operations.

and Compliance Department. The manual also includes

policies, guidelines, limits and procedures.

policies and procedures relating to the management

Infrastructure, including technology and data, plays

of conflicts of interest, external activities, gifts and

New investment products or strategies are subject to a

a critical role to enable effective investment and risk

entertainment, personal investments, market conduct,

risk identification and assessment process conducted

management. Policies and procedures are established

anti-bribery/corruption, whistle-blowing and disciplinary

by a cross-functional group, so that risks associated

to safeguard the physical security and integrity of GICs

action regarding any breach. It is mandatory for every

with the new product or activity are identified and

technology and data assets.

employee in GIC to pass the annual compliance quiz.

process includes ensuring that the required people

Our business continuity plan is tested and reviewed

We provide regular training to all staff to keep them

and infrastructure, including systems, procedures and

regularly to ensure that our procedures and

current with compliance and regulatory requirements.

controls, are in place to manage these risks.

infrastructure can support operations in the event of a

Staff receive training relevant to day-to-day areas of

business disruption. This enhances corporate resilience

responsibilities, which include market conduct, exchange

and safeguards the groups operations.

regulations, as well as data protection policies and

analysed before any new investment takes place. This

GIC adopts a strong control orientation in managing

counterparty credit risk, trading only with financially

procedures. Such training helps to raise the awareness

sound and reputable counterparties. There is a stringent

Throughout the year, internal and external auditors

of operational risk and to strengthen GICs robust and

selection and approval process in place to appoint

scrutinise all operations and business processes. Any

ethical compliance culture.

counterparties. We monitor our counterparty exposure

deficiencies identified must be addressed within set time

against set limits and report counterparty profiles

frames and reported to senior management.

to senior management regularly. Other measures to

Consistent with our long-term orientation, GICs

remuneration policies and practices support and reinforce

mitigate credit risk include using netting agreements

MANAGING PEOPLE RISK

a prudent risk-taking culture, as well as recognise and

and programmes requiring counterparties to

We require our staff to observe GICs code of ethics,

reward our people on the basis of sustainable results.

pledge collateral.

maintain exemplary conduct and comply with applicable

People are at the heart of our business. Our PRIME

laws and regulations, including prohibitions against insider

values are the compass in the management of our people,

trading and other unlawful market conduct.

processes and portfolios. Assessment of these values is

We continuously monitor for key risk indicators including

late transaction processing, late report releases, stale

included in our staff appraisals.

27

FEATURE ARTICLE ON

RE AL ESTATE

OVERVIEW

Real Estate (RE) exemplifies an asset class which offers

diversification and inflation hedging benefits for the GIC Portfolio. As real estate
projects are illiquid and require a high degree of customisation, investing in real estate
requires insights and ground knowledge of local markets. This plays to GICs strengths:
our global presence and local connections; our expertise in active asset management built
up over the years; and our long investment horizon. Today, our real estate holdings
are well diversified in more than 40 countries, including assets such as Shiodome City
Center in Tokyo; Azia Center in Shanghai; Chifley Tower and the Queen Victoria Building
in Sydney; Westin Hotel in Paris; Broadgate in London; Time Warner Center
in New York City and 101 California in San Francisco.

28

F E AT URE A R T ICL E ON RE A L E S TAT E

RE AL ES TATE AS AN ASSE T CL ASS

Investors are in real estate in part because it is

Real estate refers to land and the buildings, as well

tangible. However, investors need to be able to hold

as facilities that are fixed to the land. Real estate

the investments for a period of time, as it is difficult to

investments generate financial returns in two ways: (1)

divest a real estate holding quickly. Hence, investors will

income from rent; and (2) appreciation of the real estates

typically expect a return for assuming the illiquidity risk

value over time. The volatility in real estate returns

as well.

arises mostly from the capital appreciation component

of returns. Income returns tend to be more stable,

Real estate investment also requires a high degree of

depending on the tenancy profile and lease structure.

customisation, since most transactions are privately

brokered. Accessing real estate opportunities therefore

While national growth, employment, demographic and

requires expertise, information and local understanding.

other macro factors influence returns on real estate

The market is less efficient and transparent than public

investments, local and micro factors such as demand

markets, and so investors with greater information,

and supply, as well as government regulations

expertise and access can earn above average profits in

particularly pertaining to city development, play an

real estate.

equally important role.

29

F E AT URE A R T ICL E ON RE A L E S TAT E

OUR RE AL ES TATE INVES TMEN T S TR ATEGY

Why We Invest in Real E state

CORRELATIONS OF US REAL ESTATE ASSETS VS EQUITIES,

BONDS AND INFLATION BETWEEN 1972 AND 2014

GICs asset allocation strategy is based on a tradePrivate Real Estate

off between expected risk and return, with the goal of

Government Bonds

Equities (S&P 500)

building a diversified portfolio to deliver good overall

Private Real Estate

long-term real returns.

Government Bonds

-0.01

Equities (S&P 500)

0.08

-0.03

Inflation

0.38

0.07

-0.11

Real estate is an important asset class to GIC for

three reasons. First, real estate offers diversification

Real estate has a low correlation with bonds and public equities...

benefits, as its return drivers are somewhat different

from the traditional asset classes of bonds and equities.

Inflation

and a positive correlation with inflation.

Data obtained based on US Markets between 1972 to 2014.

In fact, real estate can have both bond and equity-like

characteristics. Like bonds, income-producing real estate

ILLUSTRATIVE LONG-TERM RISK-RETURN

EXPECTATIONS OF ASSET CLASSES

can give secure contractually-based income streams over

the long term. Like equities, real estate is a growth asset
with the potential to see growth in both incomes and
capital values.

HIGH

Private equity
Emerging market equities

Second, real estate has inflation-hedging characteristics.

The ability of real estate to track inflation is supported by
certain structures for example, where property rentals
are tied to inflation and also because real estate values
are linked to replacement costs.

Developed market equities

Cash

estate suits GIC, which is a long-term investor. Being able

us to reap the illiquidity premium inherent in the real

Higher expected return

and expected volatility

Nominal bonds
Inflation-linked bonds

Third, investing in an illiquid asset class such as real

to ride out short-term volatility and market cycles allows

Real estate

INCREASING
EXPECTED
RETURN

LOW

INCREASING EXPECTED VOLATILITY

HIGH

estate asset class.

Note: This chart is not scaled to actual size.

30

F E AT URE A R T ICL E ON RE A L E S TAT E

How We Invest in Real E state

FOUR QUADRANTS OF REAL ESTATE INVESTING

GIC is one of the more established real estate investors in

the world today. We started cross-border investing in real
estate before most other players, and have a substantial
presence in emerging markets, especially in Asia. Through
local teams spread over nine offices on four continents,
GIC has built a real estate portfolio of direct and indirect
investments with more than 350 investments in over 40
countries. Our investments are predominantly directly in

PRIVATE
Real Estate Equity

LISTED
Real Estate Equity

PRIVATE
Real Estate Debt

LISTED
Real Estate Debt

privately held properties, either wholly-owned or partlyowned through joint ventures or co-ownerships. We also
invest indirectly into real estate through funds, listed and
unlisted equity of property companies, as well as real
estate mortgages. We actively manage our properties,
to improve their competitiveness and enhance value.

Investing Flexibly Across the

Capital Structure
We invest across the capital structure (whether in
the equity or debt side of the balance sheet) of real estate,
in both public and private markets. This flexibility allows
us to seek out the best risk-adjusted returns at any given
time in the market cycle, and lets us invest in projects
using the most appropriate instrument and structure.

31

F E AT URE A R T ICL E ON RE A L E S TAT E

Investing With the Best Local Par tners

Westin, Paris

Time Warner Center, New York City, USA

We believe in developing long-term partnerships with our

global network of established and best-in class partners.
Our close working relationships with our like-minded
partners are mutually beneficial, and give GIC an edge in

Office

Hospitality

access to opportunities and execution.

Investing Across Major Proper t y Sectors

Bluewater, UK

GIC invests across all major property sectors, including

Iglu Portfolio, Australia

office, retail, hospitality, residential, industrial and

student accommodation. Each type of real estate has a
different set of drivers influencing its performance. For

Retail

Accommodation

example, the office sector is affected more by GDP and

white-collar employment growth, while the hospitality
sector relies more on tourism growth. This allows GIC to
create a diversified real estate portfolio across geography
and sectors.

Shenyang Vanke City, Shenyang, China

Residential

GLP Tokyo II, Tokyo, Japan

Industrial

32

F E AT URE A R T ICL E ON RE A L E S TAT E

Investing With Boots on the Ground

AVERAGE HOLDINGS IN THE PAST DECADE

REAL ESTATE EXPOSURES BY REGION

Due to the local nature of real estate markets, it is

critical to have local expertise and insights in the key
markets that we are in. We believe in having boots on

20%

Europe

the ground for key markets and regions that we invest

28%

in. We currently have nine offices globally and in each

of these markets, we undertake asset management for
our wholly-owned assets. This allows GIC to enhance the

Americas

52%

Asia

value of our properties. Having a local presence

also allows GIC to keep a closer watch on changing
market conditions.

Investing With a Robust Process

We strive to link our view of the global macro environment

AVERAGE HOLDINGS IN THE PAST DECADE

REAL ESTATE EXPOSURES BY SECTOR

to the investment opportunities that arise in local

markets. While real estate markets are fundamentally
driven by asset-specific conditions and risks, astute
asset selection and capital allocation across geographies

19%

13%

Hospitality

attention to risk control during the entire investment

We make new investments only after a rigorous

Industrial

Retail

and sectors can enhance returns. Our teams pay close

cycle, from underwriting to ongoing asset management.

13%

34%

Office

6%

Others

underwriting process, including physical, legal, tax and

structuring due diligence and careful consideration of the
overall market cycle.

15%

Residential

33

GOVERNANCE

The Ministry of Finance (MOF), representing the Government, sets the

investment objective, risk parameters and investment horizon for the
portfolio. It ensures that a competent board of directors is in place.
The GIC Board assumes responsibility for asset allocation and the
overall performance of the portfolio. GICs Management is responsible
for formulating and executing investment strategies and for individual
investments. The Management also reports to MOF on the risk
and performance of the portfolio.

34

GOVERNANCE

GIC was incorporated in 1981 under the Singapore

GICs investment approach, aimed at achieving good

to safeguard the countrys reserves. No one may be

Companies Act and is wholly owned by the Government

long-term real returns, is explained in the chapter on

appointed to or removed from the GIC Board without his

of Singapore. It was set up with the sole purpose of

Managing the Portfolio.

concurrence. This additional layer of control ensures that

managing Singapores foreign reserves. GIC invests

the company appoints only people of integrity who are

well over US$100 billion internationally in a wide range

The GIC Portfolio returns are tapped by the Government

of asset classes and instruments. As a rule, GIC invests

for its annual Budget. Under Singapores Constitution, the

outside Singapore.

Government is allowed to spend up to 50% of the long-

THE GOVERNMEN T

competent and can be trusted to safeguard these assets.

term expected real return on the net assets managed

An Investment Mandate from the Government to GIC sets

SOURCE AND PURPOSE OF FUNDS

by GIC and those owned by the Monetary Authority of

out the terms of appointment, investment objectives,

GIC is a fund manager for the Government, and does not

Singapore, in its annual Budget. The Governments

investment horizon, risk parameters and investment

own the assets that it manages.

reserves therefore provide a stream of returns that

guidelines for managing the portfolio. In particular,

benefits present and future generations of Singaporeans.

the expectation on the amount of risk GIC can bear is

The sources of the Governments assets, as stated by

characterised by the Reference Portfolio.

the MOF, include proceeds from issuance of Singapore

THE PRESIDEN T OF SINGAPORE

Government Securities (SGS) and Special Singapore

Since 1991, the Constitution of Singapore has provided

The Government, represented by the Ministry of Finance in

Government Securities (SSGS), Government surpluses

for the President of Singapore to be elected directly by

its dealings with GIC, neither directs nor influences the

and proceeds from the Governments land sales.

Singaporeans every six years and to exercise discretionary

companys decisions on individual investments. It holds the

However, GIC invests the assets that the Government

powers to protect the reserves not accumulated by a

GIC Board accountable for the overall portfolio performance.

places with it without regard to the sources of the

government during its current term of office. Singapores

Governments funds. The Government does not specify to

President is independent of the Government and must not

GIC provides monthly and quarterly reports to the

GIC the sources of assets placed with it, whether they are

be a member of any political party. This system aims to

Accountant-General of Singapore. These reports list

encumbered or unencumbered, nor their proportions.

prevent the government of the day from spending more

the financial transactions, as well as the holdings and

The Governments mandate to GIC is to manage assets in

than what it has earned during its term of office, or drawing

bank account balances. The reports provide detailed

a single pool, on an unencumbered basis, with the aim of

on past reserves, without the approval of the President.

performance and risk analytics, as well as the distribution

of the portfolio by asset class, country and currency.

achieving good long-term real returns. (An explanation of

the Governments framework for managing its assets and

GIC is accountable in various key areas to the President of

Once a year, the management formally meets the Minister

liabilities is available on the MOFs website.)

Singapore as a Fifth Schedule company. The Constitution

for Finance and his officials to report on the risk and

empowers him to obtain information to enable him

performance of the portfolio in the preceding financial year.

35

GOVERNANCE

THE AUDITOR-GENER AL OF SINGAPORE

BOARD COMMIT TEES

Audit Committee

The Auditor-General, who is appointed by the President

The GIC Board is supported by the Investment Strategies

The audit committee reviews and assesses the adequacy

of Singapore, submits an annual report to the President

Committee, Investment Board, Risk Committee,

and effectiveness of the system of internal controls,

and Parliament on his audit of the Government and other

Audit Committee and the Human Resource and

including financial, operational and compliance controls,

bodies managing public funds.

Organization Committee.

and risk management policies and procedures. It also

In addition to being audited by GICs internal audit, the

Investment Strategies Committee

audit function. The committee reviews the integrity of the

main companies in the GIC Group and the Governments

The investment strategies committee reviews and

financial reporting process and other related disclosures

portfolio managed by GIC are independently audited by the

critically evaluates managements recommendations on

for GIC companies, significant ethics violations, impact

Auditor-General of Singapore.

asset allocation before these are put to GIC Board for

of changes in the regulatory and legal environment, and

decision. The management reports to this committee on

issues of fraud and financial losses.

supervises and evaluates the effectiveness of the internal

Other companies in the group and the investment holding

the performance of the portfolio. The committee does not

companies are audited by public accounting firms.

decide on specific deals.

The GIC Board

Investment Board

evaluates and approves GICs compensation policies

The GIC Board is responsible for the GICs Policy

The investment board assists the GIC Board in its oversight

for the group and senior management, succession

Portfolio which determines its long-term asset

of GICs investment processes and its implementation, with

planning for key man appointments and oversees

allocation strategy and for the overall performance

particular attention to large individual investments. It is

organizational development.

of the portfolio. The Boards involvement in GICs

not involved in the asset allocation decisions, which are the

investment strategies pertains to decisions on the Policy

responsibility of the GIC Board.

Human Resource And Organization Committee

The human resource and organization committee

Portfolio, rather than the active strategies managed by

GIC Management.

Risk Committee
The risk committee advises the GIC Board on risk

The GICs asset allocation operates within the risk

matters and provides broad supervision on the

constraints represented by the Reference Portfolio, as

effectiveness of risk management policies and practices.

determined by the Government in its mandate to GIC.

It reviews GICs risk profile as well as significant risk

(See chapter on Managing the Portfolio.)

issues arising from operations and investments.

36

GOVERNANCE

IN TERNATIONAL ADVISORY BOARD

GIC MANAGEMEN T

Investment Management Committee

The international advisory board provides the GIC

The management formulates and executes investment

The investment management committee assists the

Board, board committees and management with global

strategies. Once the long-term asset allocation strategy

group executive committee in the implementation of

and regional perspectives on geopolitical, economic

(as set out in its Policy Portfolio) is decided by the GIC

investment policies and active strategies. It regularly

and market developments. It provides advice and

Board, the management seeks to add value through

reviews matters related to portfolio management,

perspectives on a range of investment-related matters,

an overlay of active, skill-based strategies (i.e. Active

including rebalancing, portfolio liquidity, capital

in particular, global investment trends, emerging asset

Portfolio). The management structure is relatively flat,

budget usage, active strategy implementation, risk

classes and new growth opportunities.

with clear reporting lines and accountability.

methodologies, scenarios, stress loss, etc. This

committee is expected to monitor the performance and

BOARDS OF ASSE T MANAGEMEN T COMPANIES

Group Executive Committee

risk of the portfolio, including active strategies, on a

All three asset management companies GIC Asset

The group executive committee, the highest management

monthly basis.

Management, GIC Real Estate and GIC Special

body in GIC, brings together the groups functional and

Investments are wholly-owned subsidiaries responsible

investment heads. It deliberates on management proposals

Direct Investment Steering Committee

for investing the portfolio within the guidelines set out

for organizational, investment and risk issues before these

The direct investment steering committee oversees the

in the Investment Mandate to GIC. Their boards oversee

are submitted to the relevant board committees and the

strategic plan, progress and pace of direct investments

investment strategies of the asset classes under

GIC Board. This committee reviews and approves major

across GIC. It also looks into the development of

management and review operations of the companies

business, governance and policy issues of significance

relationships with investee companies to identify and

within group-wide policies.

and criticality to GIC which apply to the entire group. It

develop deal opportunities. This committee does not

also oversees organizational management initiatives,

approve investments.

business planning and personnel matters including

succession planning, talent development, compensation and

Group Risk Committee

performance management processes.

The group risk committee is a platform that provides

oversight for the risk management policies and practices
for the GIC Group. The committee also acts as a forum for
the chief risk officer to solicit views on the strategic risk
management issues that would enable him to carry out
his duties.

37

GOVERNANCE

Terms of reference

The following chart summarises the accountability

of the GIC Board, International Advisory Board and
board committees.

Responsible for the GICs Policy Portfolio which determines its long-term asset
allocation strategy and for the overall performance of the portfolio.

GIC Board

Does not approve individual investments which are the responsibilities of

the management.

International Advisory Board

Investment
Strategies
Committee

Board
Committees

Assists the GIC Board in evaluating managements recommendations on asset

allocation, and in its oversight of overall portfolio performance.
Recommends the key drivers for GICs return and risk outcomes.
Does not approve individual investments.

Investment
Board

Assists the GIC Board in its oversight of GICs investment process, with particular
attention to large individual investments.

Risk
Committee

Oversees the effectiveness of risk management policies and practices in the

GIC Group.

Audit
Committee

Human Resource
and Organization
Committee

GIC Management

Provides views on market developments generally and, in particular, the mediumto long-term outlook for investment opportunities around the world.

Looks into the effectiveness of the internal control systems for safeguarding
companys assets and clients investment portfolios.
Reviews the integrity of the financial reporting process, significant ethics violations,
compliance with regulatory and legal requirements, and issues of fraud and
financial losses.

Oversees organizational matters in GIC, including compensation policies, talent

development, succession planning, and organizational development.

Formulates and executes investment strategies.

Constructs Active Portfolio, with an overlay of active, skill-based strategies.

38

GIC BOARDS AND BOARD COMMITTEES

BOARD OF DIREC TORS

INVES TMEN T S TR ATEGIES

COMMIT TEE

INVES TMEN T BOARD

AUDIT COMMIT TEE

Chairman

Chairman

Chairman

IN TERNATIONAL
ADVISORY BOARD

LEE Hsien Loong

Chairman

ANG Kong Hua

CHEW Choon Seng

Chairman

Tharman SHANMUGARATNAM
Directors

TEO Chee Hean

(appointed 8 April 2015)

Members

Members

LIM Hng Kiang

Deputy Chairman

G Leonard BAKER Jr

Raymond LIM Siang Keat

TEO Chee Hean

Peter SEAH Lim Huat

Lon BRESSLER

LOH Boon Chye

Members

David DENISON

Gautam BANERJEE

G Leonard BAKER Jr

Tharman SHANMUGARATNAM
HENG Swee Keat

Members

HSIEH Fu Hua

ANG Kong Hua

LIM Hng Kiang

CHOO Chiau Beng

(appointed 28 April 2015)

Peter SEAH Lim Huat

ANG Kong Hua

CHEW Choon Seng

HENG Swee Keat

Raymond LIM Siang Keat

S ISWARAN

RISK COMMIT TEE

Lon BRESSLER

HUMAN RESOURCE AND

ORGANIZ ATION COMMIT TEE

Dr Martin L LEIBOWITZ

Chairman

Knut KJAER

Peter SEAH Lim Huat

David DENISON

Deepak PAREKH

Chairman

HSIEH Fu Hua

Members

LOH Boon Chye

Advisors

Gautam BANERJEE

Dr Martin L LEIBOWITZ

Suppiah DHANABALAN

G Leonard BAKER Jr

Members

HSIEH Fu Hua

LIM Siong Guan

Knut KJAER

SECK Wai Kwong

Gautam BANERJEE

LIM Chow Kiat

David DENISON

Raymond LIM Siang Keat

LOH Boon Chye

LIM Hng Kiang

CHEW Choon Seng

Advisor
Dr Martin L LEIBOWITZ

39

GROUP COMMITTEES
GROUP E XECUTIVE COMMIT TEE

INVES TMEN T MANAGEMEN T COMMIT TEE

Chairman

DIREC T INVES TMEN T S TEERING

COMMIT TEE

Members

Chairmen
LIM Siong Guan

LIM Chow Kiat

Chairman

Chief Economist and Director,

Group President

Group Chief Investment Officer

LIM Chow Kiat

Economics & Investment Strategy

LIM Chow Kiat

Members

Group Chief Investment Officer

Dr CHIA Tai Tee

Members

Chief Risk Officer

LIM Kee Chong

Dr Leslie TEO Eng Sipp

Group Chief Investment Officer

Members

Charles LIM Sing Siong

Deputy Group Chief Investment Officer

General Counsel
CHAN Hoe Yin

LIM Kee Chong

Dr Leslie TEO Eng Sipp

Deputy Group Chief Investment Officer

Chief Economist and Director,

Dr Jeffrey JAENSUBHAKIJ

Economics & Investment Strategy

President, Public Markets

Dominic LIM Kwang Wei

GOH Kok Huat

Director, Risk & Performance

Chief Operating Officer

ONG Hian Leong

Management

and President, Real Estate

Director, Technology

TUNG Siew Hoong

TAY Lim Hock

KWOK Wai Keong

Head, Portfolio Execution Group

President, Private Equity

Global Head, Asset Management

& Infrastructure

and Co-Head, Asia, Real Estate

Director, Finance

Dr Jeffrey JAENSUBHAKIJ
President, Public Markets
GOH Kok Huat

Joyce TAN Siew Pheng

Director, Investment Operations

Chief Operating Officer

and President, Real Estate
TAY Lim Hock
President, Private Equity

Elizabeth CHAU Lai Yin

& Infrastructure

Head, Treasury & Portfolio Management

GROUP RISK COMMIT TEE

John TANG

Group, Portfolio Execution Group

Chairman

Global Head, Portfolio, Strategy & Risk

Dr CHIA Tai Tee

Group, Private Equity & Infrastructure

Dr CHIA Tai Tee

Chief Risk Officer

THAM Chiew Kit

Chief Risk Officer

LEONG Wing Kwan

Co-Head, Total Portfolio Strategy,

Dr Leslie TEO Eng Sipp

Economics & Investment Strategy

Chief Economist and Director, Economics

& Investment Strategy

Alternate Chairman

Head, Investment Services Office,

Dominic LIM Kwang Wei

Public Markets

Sterling GUNN

Director, Risk & Performance

Co-Head, Total Portfolio Strategy,

Management

Economics & Investment Strategy

CHOY Siew Kai

Director, Data & Analytics

40

ORGANIZ ATIONAL STRUCTURE

LIM Siong Guan

Lim Chow Kiat

Group
President

Group Chief
Investment Officer

LIM Kee Chong

Dr Jeffrey JAENSUBHAKIJ

GOH Kok Huat

TAY Lim Hock

Dr CHIA Tai Tee

Dr Leslie TEO Eng Sipp

Deputy Group Chief

Investment Officer

President,
Public Markets

Chief Operating Officer

President, Real Estate

President,
Private Equity & Infrastructure

Chief Risk Officer

Chief Economist

CORPOR AT E HE A DQUA R T ERS

IN VE S T MEN T GROUPS

Dr Leslie TEO Eng Sipp

CHAN Hoe Yin

PUBLIC MARKETS

REAL ESTATE

Economics
& Investment Strategy

Finance

Dr Jeffrey JAENSUBHAKIJ

KWOK Wai Keong

Equities

Asset Management (Global)

& Investments (Asia)

Vincent CHEANG Weng Seng

Internal Audit

Deanna ONG Aun Nee

Human Resource
& Organization

Dominic LIM Kwang Wei

Joyce TAN Siew Pheng

Risk & Performance

Management

Investment Operations

WONG Ai Chiat
Corporate Administration
& Infrastructure

CHOY Siew Kai

Data & Analytics

Charles LIM Sing Siong

Legal & Compliance

ONG Hian Leong

Technology

LIEW Tzu Mi
Fixed Income

Portfolio Execution Group

LEE Kok Sun

Investments (Americas)

Betty TAY Hui Choo

External Managers

PRIVATE EQUITY
& INFRASTRUCTURE

IN T EGR AT ED S T R AT EGIE S

Anthony LIM Weng Kin

LIM Kee Chong

President (Americas)

John TANG

ANG Eng Seng

Christopher MORRISH
Investments (Europe)

Bernard PHANG Sin Min

Research
& Strategic Planning

ANG Eng Seng

Portfolio, Strategy
& Risk (Global)

President (Europe)

Eugene WONG Yau Kee

Sharon SUN Xiaoning

LOH Wai Keong

Investments (Asia)

TUNG Siew Hoong

OVERSE A S OFFICE S

Funds & Co-Investments

(Global)

Beijing Office

Kishore GOTETY
CHOO Yong Cheen

Mumbai Office

Direct Investments and

Funds & Co-Investments
(Europe)

Wolfgang SCHWERDTLE

Suzi COHEN
Direct Investments and
Funds & Co-Investments
(Americas)

Sao Paulo Office

Ray PARK Rae-Ik

Seoul Office

SUN Jianjun

Maverick WONG

Shanghai Office

Direct Investments (Asia)

and Funds & Co-Investments
(Asia/Emerging Markets)

Ken CHAN Chien-Wei

Tokyo Office

Stuart BALDWIN
Infrastructure (Global)

41

EXECUTIVE MANAGEMENT

> LEF T TO RIGHT:

LIM Siong Guan

Group President

LIM Chow Kiat

Group Chief Investment Officer

LIM Kee Chong

Deputy Group Chief Investment Officer

Dr Jeffrey JAENSUBHAKIJ
President, Public Markets

< RIGHT TO LEF T:

Dr CHIA Tai Tee

Chief Risk Officer

Dr Leslie TEO Eng Sipp

Chief Economist and Director,
Economics & Investment Strategy

GOH Kok Huat

Chief Operating Officer and
President, Real Estate

TAY Lim Hock

President, Private Equity & Infrastructure

42

PROFILES
LEE Hsien Loong
CHAIRMAN
Lee Hsien Loong has been Prime Minister of Singapore since 2004. Prior to that, he was Deputy Prime Minister
with responsibilities for economic and civil service matters. He has also held ministerial appointments in Trade
and Industry, Defence and Finance, and chaired the Monetary Authority of Singapore from 1998 to 2004. Before
entering politics, he was a Brigadier-General in the Singapore Armed Forces. He studied at Cambridge University
and the Harvard Kennedy School, Harvard University.

LIM Hng Kiang

An engineering graduate of Cambridge University, Lim Hng Kiang spent nine years in the Singapore Armed Forces
where he held both command and staff positions. In 1985, he earned a masters degree in Public Administration
at Harvard University and returned to serve as the deputy secretary in the Defence and National Development
ministries before entering politics in 1991. He held Cabinet posts in National Development, Health, Foreign Affairs,
Finance and the Prime Ministers Office before his appointment as Minister for Trade and Industry in 2004.

43

PROFILES
Tharman SHANMUGARATNAM
Tharman Shanmugaratnam has spent his professional and political years in the fields of economic/financial policy
and education. He was chief executive of the Monetary Authority of Singapore before he entered politics in 2001.
He served as Minister for Education for five years, and has been Minister for Finance since December 2007. He
was appointed Deputy Prime Minister in May 2011. He was also appointed Chairman of the International Monetary
and he policy steering committee of the IMF, in March 2011. He obtained undergraduate and masters degrees in
Economics from the LSE and Cambridge University, and a masters in Public Administration at Harvard University.

TEO Chee Hean

Teo Chee Hean, Deputy Prime Minister of Singapore since 2009, had held cabinet posts in Defence, Education,
Finance, Environment and Communications, before his current appointment as the Coordinating Minister for
National Security, Minister for Home Affairs, and Minister in charge of the Civil Service. He also oversees the
National Population and Talent Division, and the National Climate Change Secretariat. Prior to entering politics in
1992, he was a Rear Admiral in the Singapore Armed Forces. A Presidents Scholar and a Singapore Armed Forces
Scholar, he studied at the University of Manchester. He had a Masters in Computing Science from the Imperial
College and a Masters in Public Administration from Harvard University, where he was named a Littauer Fellow.

44

PROFILES

HENG Swee Keat

Heng Swee Keat was appointed the Minister for Education on 21 May 2011. Prior to that, he was the managing
director of the Monetary Authority of Singapore, Permanent Secretary of the Ministry of Trade and Industry, chief
executive officer of the Trade Development Board and Principal Private Secretary to the then Senior Minister Lee
Kuan Yew. He had also served in various positions in the Singapore Civil Service, and was awarded the Gold Medal
in Public Administration and the Meritorious Medal for his contributions to the public service. He has a masters
degree in Economics from the Cambridge University and a masters degree in Public Administration from the
Harvard University.

ANG Kong Hua

Ang Kong Hua started his career at the Economic Development Board after graduating from the University of Hull
in the UK. He joined DBS Bank at its inception in 1968 and pioneered its investment banking division. For 28 years
since 1974, he was the CEO of NSL Ltd (formerly NatSteel Ltd) before retiring in 2003 and stayed as its Executive
Director till 2010. He currently serves as the Chairman of Sembcorp Industries Ltd. He was formerly Chairman of
Global Logistic Properties Limited, Singapore Telecommunications and Singapore Post, Vice Chairman of Neptune
Orient Lines Ltd and Director of DBS Bank, CIMC Raffles Offshore (Singapore) Limited and k1 Ventures Limited.

45

PROFILES

Peter SEAH Lim Huat

Chairman of DBS Group Holdings, Singapore Health Services, LaSelle College of the Arts and National Wages
Council, Peter Seah Lim Huat serves on the boards of many commercial enterprises in Singapore and overseas.
A graduate of the former University of Singapore, he held several senior positions in his 24-year career with the
Overseas Union Bank before retiring as its vice chairman and chief executive officer in 2001. He was president and
chief executive officer of the Singapore Technologies Group from 2001 to 2004.

CHEW Choon Seng

Chew Choon Seng has been a member of the board of GIC since January 2004. Until his retirement at the end of
2010, he was the CEO of Singapore Airlines for over seven years. In January 2011, he became the Chairman of the
Singapore Exchange, of which he has been director since December 2004, and was also appointed Chairman of the
Singapore Tourism Board. An engineer by training, he graduated from the then University of Singapore and from
Imperial College, London.

46

PROFILES

Raymond LIM Siang Keat

Raymond Lim is Chairman of APS Asset Management and Senior Advisor to the Swire Group. He is also a director
of several companies including Hong Leong Finance, Raffles Medical Group and Insurance Australia Group.
A Member of the Singapore Parliament since 2001. Mr Lim has held various ministerial appointments in the
Singapore Government including Foreign Affairs, Trade and Industry, Entrepreneurship, Finance and Transport
from December 2001 to May 2011. Prior to entering politics in 2001, he held various senior positions in the financial
industry including as a Managing Director of Temasek Holdings, Chief Executive Officer of DBS Securities and
Group Chief Economist of ABN AMRO Asia Securities. He is author of Straight Talk Reflections on Singapore
Politics, Economy and Society.

HSIEH Fu Hua
Hsieh Fu Hua is Chairman of United Overseas Bank Limited, and adviser to PrimePartners Group, which he cofounded. He is also a director of Tiger Airways Holdings Limited. Active in the community, he serves on the boards
of a number of non-profit organizations, chairs the National Gallery Singapore, and is President of the National
Council of Social Services. From 2003 to 2009, he was CEO and a director of the Singapore Exchange. His career
has been in merchant banking and capital markets in Asia. He joined Morgan Grenfell Asia Holdings in 1974, after
graduating from the former University of Singapore, and rose to become its chief executive. He was also group
managing director of BNP Prime Peregrine Group in Hong Kong, a joint venture Asian investment banking arm of
BNP founded by PrimePartners.

47

PROFILES

LOH Boon Chye

Loh Boon Chye is the CEO of Singapore Exchange. Prior to the appointment, he was the former deputy president
for Asia Pacific and head of Asia Pacific Global Markets of Bank of America Merrill Lynch. Additionally, he was the
firms country executive for Singapore and South East Asia and a member of its Asia Pacific Executive Committee.
Before joining Bank of America Merrill Lynch in December 2012, Mr Loh spent 17 years with Deutsche Bank in
Asia, where he most recently was head of the Corporate and Investment Banking division for the Asia Pacific
region. He began his career in finance as an investment officer with the Monetary Authority of Singapore in 1989. In
1992, he joined the Singapore branch of Morgan Guaranty Trust Co of New York, managing its South East Asia fixed
income and derivatives business.
Mr Loh has more than 25 years of experience in the industry and has played a key role in the development of the
capital markets in South East Asia, holding a number of senior advisory positions. He was the deputy president
of ACI Singapore in 1999, and he was a non-independent director of the Singapore Exchange from 2004 to 2012.
He was also council member at the Institute of Banking & Finance Singapore and until recently he chaired the
Singapore Foreign Exchange Market Committee.
Mr Loh holds a Bachelor of Engineering degree from the National University of Singapore.

48

PROFILES

Gautam BANERJEE
Gautam Banerjee joined Blackstone Singapore as Senior Advisor and Chairman on 1 January 2013. On 1 May
2014, he was appointed a Senior Managing Director of Blackstone and co-Chairman of the firms Asia Operating
Committee. In his new role, he brings senior focus and oversight to risk, controls, and governance in Asia for the
firm, across offices, businesses and functions. He continues to be a key external ambassador for the firm.
Previously, Mr Banerjee served as Executive Chairman of PricewaterhouseCoopers (PwC) Singapore for nine
years until his retirement on 31 December 2012. He spent over 30 years with the firm in various leadership roles in
Singapore, India and East Asia.
Mr Banerjee is a Vice Chairman of the Singapore Business Federation and sits on the boards of Singapore Airlines
Limited, The Straits Trading Company Limited and Piramal Enterprises Limited. His roles in the not-for-profit
sector include being a Member of the Economic Development Board, a Governing Board member of Yale-NUS
College, a trustee of the Singapore Indian Development Association (SINDA) and a member of the Singapore Legal
Service Commission. He was a Nominated Member of Parliament in Singapore from 2007 to 2009.
Mr Banerjee is a fellow of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute
of Singapore Chartered Accountants (ISCA). He has a Bachelor of Science (Honours) degree in Accounting and
Financial Analysis from the University of Warwick.

49

PROFILES

S DHANABALAN
S Dhanabalan is currently Member, Council of Presidential Advisers and Member, Presidential Council for
Minority Rights.
He was Chairman of Temasek Holdings (1996Jul 2013), Chairman of Singapore Airlines (199698), Chairman,
DBS Group Holdings Ltd (19992005) and Director, Government of Singapore Investment Corporation Private Ltd
(19812005).
Mr Dhanabalan started his career in the Singapore Civil Service in 1960 and later served, from 1961 to 1968, in the
Economic Development Board, the government investment promotion agency. He was part of a small group that
established the Development Bank of Singapore where he served from 1968 to 1978. He entered politics in 1976 and
was a Member of Parliament from 1976 to 1996. While a Member of Parliament, he was Minister for Foreign Affairs
(198088), Minister for National Development (198792) and Minister for Trade and Industry (199293). During this
period, he was also concurrently Minister for Culture (198184) and Minister for Community Development (198586).
Mr Dhanabalan received a Bachelor of Arts with Honours in Economics from the University of Malaya, Singapore.

S ISWARAN
S Iswaran, currently the Minister in the Prime Ministers Office and Second Minister for Home Affairs and Trade
and Industry, Singapore, began his political career in 1997. Prior to his current appointment in 2011, he had
served in both the public and private sectors including the National Trade Union Congress as Director for Special
Projects; the Singapore Indian Development Association as CEO; and most recently, Temasek Holdings where he
was Managing Director focusing on leveraged buy-outs and high tech/biotech investments.

50

PROFILES

CHOO Chiau Beng

Choo Chiau Beng was Chief Executive Officer of Keppel Corporation from 1 January 2009 to 31 December 2013.
Before that, he was CEO of Keppel FELS from 1983 to 2008 and Chairman & CEO of Keppel Offshore & Marine from
2002 to 2008. He was Executive Director of Keppel Corporation since 1983 and Senior Executive Director since 2005.
Upon his retirement on 1 January 2014, he was appointed Senior Advisor to the Board of Keppel Corporation.
Mr Choo was awarded the Colombo Plan Scholarship to study Naval Architecture in the University of Newcastle upon
Tyne. He graduated with a Bachelor of Science (First Class Honours) in 1970 and a Master of Science degree in Naval
Architecture in 1971. He attended the Programme for Management Development in Harvard Business School in 1982
and is a Member of Wharton Society of Fellows, University of Pennsylvania. He was conferred Doctor of Civil Law by
the University of Newcastle upon Tyne in 2009.
Mr Choo is the Chairman of M1 Limited. He sits on the Board of Directors of Keppel Care Foundation Limited and
KrisEnergy Ltd.
He is a Board Member of National Research Foundation, Prime Ministers Office and a member of Science and
Engineering Research Council Board of A*Star. He is also a board member of Energy Studies Institute, National
University of Singapore (NUS); a Board and Council Member of American Bureau of Shipping; the Chairman
of Centre for Maritime Studies, NUS and the Council Member of Singapore of ASEAN Council on Petroleum
(ASCOPE). He is the Chairman of the Board of Governors of Raffles Institution; a member of Singapore University
of Technology and Designs Board of Trustees; a Management Board member of Institute for Engineering
Leadership, NUS and a member of the Advisory Board for the Centre for Liveable Cities.
In July 2014, Mr Choo was appointed by NUS as Provosts Chair and Professor (Practice) in the Department of Civil
and Environmental Engineering, Faculty of Engineering and Department of Management and Organization, NUS Business
School. At the same time, he was also appointed as Rector of Residential College 4 of NUS.
Mr Choo was conferred the Public Service Star Award (BBM) in August 2004, The Meritorious Service Medal in 2008 and
NTUC Medal of Commendation (Gold) Award in May 2007.
He is Singapores Non-Resident Ambassador to Brazil.
51

PROFILES

SECK Wai Kwong

Seck Wai Kwong joined State Street Bank on 1 Sep 2011 as its executive vice president and Head of Global Services
and Global Markets, Asia Pacific. He has held senior executive positions in the Monetary Authority of Singapore,
the Government of Singapore Investment Corporation, Lehman Brothers and DBS Bank. Until June 2011, he was
the chief financial officer of the Singapore Exchange for eight years. A graduate from Monash University with first
class honours in Economics, he has a masters degree in business administration from the Wharton School.

G Leonard BAKER Jr
A partner since 1973 in Sutter Hill Ventures, Silicon Valleys oldest venture capital firm, G Leonard Baker Jr is also
a director of a number of early stage companies. He is a trustee of Yale University, chairs Yales finance committee,
and serves on the universitys investment committee and the advisory board of the School of Management. He is a
board member of the Environmental Defense Fund, serves as an advisor on the David and Lucile Packard Foundation
Investment Committee, and is a former member of the Advisory Council of the Stanford Graduate School of Business.

He is also a member of Singapore Ministry of Educations International Academic Advisory Panel, established in 1997
by MOE to advise Singapores universities on major trends and directions in university education and research. In
2005, he was conferred the Public Service Star Award for his contributions to Singapore in the areas of education and
investment management.

52

PROFILES

Lon BRESSLER
Lon Bressler is a Partner at Perella Weinberg Partners and manages Perella Weinberg Real Estate funds
focused on real estate and real estate related opportunities in Europe. Prior to joining Perella Weinberg Partners,
he served as Chairman and Chief Executive Officer of Unibail from 1992 through 2006. During this tenure,
Unibail became Europes largest real estate investment trust. He began his career with Chase Manhattan Bank
successively in Paris, New York, Stuttgart, Frankfurt and London. In 1978, he joined the Midland Bank Group to
participate in the establishment of Midland Bank in France. He was Chairman of the Executive Board of Midland
Bank SA from 1984 to 1989. In 1989, he joined the Lanvin Group where he was Chairman and Chief Executive of
Jeanne Lanvin and Lanvin Parfums. In 1991, he joined Worms & Cie and remained a Managing Partner until 1996.
Mr Bressler is a graduate of the Institut dEtudes Politiques de Paris and has a degree in Law.

Dr Martin L LEIBOWITZ
A managing director with Morgan Stanley Researchs global strategy team, Dr Martin Leibowitz was vice chairman
and chief investment officer of TIAACREF from 1995 to 2004. A graduate of the University of Chicago with a PhD
from the Courant Institute of New York University, he has received wide recognition for his writings and his
contribution to the financial industry. He currently serves on the investment advisory committees of the Harvard
Management Corporation, Rockefeller Foundation, Carnegie Foundation, and Institute for Advanced Study.

53

PROFILES

Deepak PAREKH
Deepak Parekh is chairman of the Housing Development Finance Corporation limited (HDFC) since 1993, having
joined the organization in 1978. HDFC is Indias leading Financial Services conglomerate with presence in Banking,
Asset Management, Life Insurance, General Insurance, Real Estate Venture Fund and Education Loans. He is the
Non-Executive Chairman of Glaxo Smithkline Pharmaceuticals and Siemens India. He is also on the boards of Exide,
Mahindra & Mahindra, Indian Hotels and international boards of DP World UAE and Vedanta Plc. In addition, he is
also on the Advisory Boards of several Indian corporate and MNCs. He is dubbed as the unofficial crisis consultant
of the Government and is a member of various high-powered Advisory Committees and Task Forces.
Some of his most important recognitions are:
The Padma Bhushan in 2006.
Knight in the Order of the Legion of Honour, one of the highest distinction by the French Republic, in 2010.
First International recipient of the ICAEW Outstanding Achievement Award in 2010.

Knut KJAER
Knut Kjaer is founding partner of Trient Asset Management and chairman of FSN Capital Partners. As Chief
Executive Officer of Norges Bank Investment Management from its inception in 1997 to 2008, Kjaer was
responsible for the operative management of the Norwegian Government Pension Fund and the management of
Norways foreign reserves. He served as President of RiskMetrics Group Inc from 2009 to 2010. He is a member
of the Investment Committee at Stichting Pensioenfonds ABP; the International Advisory Council of China
Investment Corporation and the commission that manages the Irish National Pensions Reserve Fund. He holds
Masters Degrees in Economics and a degree in Political Science from the University of Oslo. He has attended the
Advanced Management Program at Harvard Business School.

54

PROFILES

David DENISON
David Denison has extensive experience in the financial services industry, most recently serving as President and
Chief Executive Officer of the Canada Pension Plan (CPP) Investment Board from 2005 to 2012. He has held senior
positions in the investment, consulting and asset management businesses in Canada, the United States
and Europe.
Mr Denison is a director of Royal Bank of Canada, BCE Inc., and is chair of the boards of Bentall Kennedy and
Bridgepoint Health. He also serves on the World Bank Treasury Expert Advisory Committee and the University
of Toronto Investment Advisory Committee. He earned Bachelor degrees in mathematics and education from
the University of Toronto and is a Chartered Accountant and a Fellow of the Institute of Chartered Accountants
of Ontario.

LIM Siong Guan

Lim Siong Guan, Group President, joined GIC in 2007. He was Chairman of the Economic Development Board from
October 2006 to June 2009. A former head of the Singapore Civil Service, he was Permanent Secretary in the
ministries of Defence, Education and Finance and the Prime Ministers Office, and led various major government
agencies. He has been an adjunct professor at the Lee Kuan Yew School of Public Policy at the National University
of Singapore since March 2005, instructing on leadership and change management in the public sector, and is a
Senior Fellow of the Civil Service College.

55

PROFILES

LIM Chow Kiat

Lim Chow Kiat has been GICs Group Chief Investment Officer since 1 February 2013. After graduating with
first class honours in Accountancy from Nanyang Technological University, he joined GIC in 1993 as a portfolio
manager. He developed GICs investment capability in corporate bonds, and was appointed head of the fixed
income, currency and commodities department and Deputy President of GIC Asset Management in 2008. He was
appointed President (Europe) in 2009, overseeing GICs investments and relationships in Europe, Africa and the
Middle East before his appointment as President of GIC Asset Management in July 2011.

LIM Kee Chong

Lim Kee Chong is GICs Deputy Group Chief Investment Officer and Director of Integrated Strategies. He joined GIC
in 1987. He was appointed Deputy President of GIC Asset Management and the head of global equities in July 2010.
He has experience managing Japan equities, European equities, global sector and global equities portfolios. He
graduated with an Economics degree from University of Tokyo where he studied under a government scholarship.

56

PROFILES

Dr Jeffrey JAENSUBHAKIJ
Dr Jeffrey Jaensubhakij was appointed President, GIC Asset Management and Director of Equities on 1 April
2013. Prior to this appointment, he was President (Europe) since 2011 and was responsible for coordinating GICs
investment activities in Europe across public and private asset classes. From 2003 to 2011, he was based in GICs
New York Office where he headed the Total Return Equities and the US Equities teams. Dr Jaensubhakij joined GIC
in 1998 as a Senior Economist responsible for covering the US economy. He has also had asset allocation portfolio
responsibilities as Co-head of Asset Allocation Strategy in the Economics and Strategy Department. He holds
a B.A. in Economics from Cambridge University and a Ph.D. in Economics from Stanford University where his
research was on foreign portfolio investment and inflation in emerging stock markets.

TAY Lim Hock

Tay Lim Hock joined GIC Special Investments in 1995, and was involved in private equity investments in Asia. He
was the head of the European private equity team in London from 2000 to 2003, and took over as head of the US
private equity team in 2003. He became Global Head of the Funds and Co-investment group in 2008, and was
appointed Deputy President of GIC Special Investments in July 2010 and President in July 2011. Prior to GIC, he
worked as an aeronautical engineer with the Republic of Singapore Air Force after graduating from IEcole
Nationale de IAviation Civile (ENAC) in Toulouse, France, with a Masters in aeronautical engineering. He holds an
MBA from Nanyang Technological University in Singapore and has completed the Stanford Executive Program.

57

PROFILES

GOH Kok Huat

Goh Kok Huat is GICs Chief Operating Officer and President, Real Estate. Previously, he headed investment
management (Asia) in GIC Real Estate and was appointed its Deputy President in July 2010. He joined GIC from
Tishman Speyer in New York, where he was Managing Director of equity capital markets. Prior to that, he was with
the Ascendas Group where he held various appointments including COO of the Group, CEO of AscendasMGM,
CEO of Singapore Operations and CEO of Bangalore IT Park. He spent 10 years in the military and is an Economics
graduate of Cambridge University.

Dr Leslie TEO Eng Sipp

Dr Leslie Teo started his career as an economist at the International Monetary Fund where he held various
appointments over 9 years, including Deputy Division Chief and Assistant to the Director of the Asian Department.
He also spent a number of years at the Monetary Authority of Singapore working on financial market surveillance
and stability issues. He joined GIC as a senior investment manager in the Economics & Strategy department in
2008. He headed the Asian/Emerging Market Research & Strategy team and served as Deputy Director, before his
appointment as Deputy Director of the Economics & Investment Strategy department (EIS). He was appointed Chief
Economist in July 2011 and Director of EIS in February 2012. He is a graduate of the University of Chicago and has a
PhD from the University of Rochester.

58

PROFILES

Dr CHIA Tai Tee

Prior to his appointment as the Chief Risk Officer, Dr Chia Tai Tee served as the Deputy Chief Risk Officer and
Director of Risk and Performance Management since July 2010. He joined GIC in 1994 and has held various
positions in economics and strategy, foreign exchange, and quantitative investments, also as the Deputy Director
of investment policy and strategy. He is a member of the Peoples Association Investment Advisory Committee.
He graduated in Economics from University of Adelaide and holds a PhD from Australian National University.

59

OUR PEOPLE

Headquartered in Singapore,
GIC is a global organization with offices
in 10 cities worldwide
and an international talent pool.

60

OUR PEOPLE

We expect our people always to strive for excellence,

WHERE OUR EMPLOYEES COME FROM

to be the best they can be. We regard our people as

31 MARCH 2015

long-term assets, well-chosen and carefully developed

through challenging assignments and periodic training
programmes. They have to be comfortable in a global
environment of volatility, uncertainty, complexity and
ambiguity, always looking for better ways but never
compromising on our values and principles.

VALUES AND PRINCIPLES

Our values, encapsulated in the acronym PRIME, are

10%

Americas

9%

Europe

17%

Asia, Australasia & Africa

64%

Singapore

Prudence, Respect, Integrity, Merit and Excellence.

Under The GIC Way, we have 14 principles grouped
under the three pillars of Clients First, People The Key,
and Future Now. They enunciate thought, action and
behaviour which we believe will yield us good, sustainable
long-term performance.

61

OUR PEOPLE

WHERE OUR INVESTMENT PROFESSIONALS IN SINGAPORE (HEADQUARTERS) COME FROM

31 MARCH 2015

6%

Americas

OUR GLOBAL TE AM
We have more than 1200 GICians from over 30 countries.

4%

Europe

They manage investments in more than 40 countries from

our 10 global offices. Singapore is where we have our
headquarters while our overseas offices are located in:
Beijing, London, Mumbai, New York, So Paulo, San

24%

66%

Asia, Australasia and Africa

Singapore

Francisco, Seoul, Shanghai and Tokyo. Singaporeans form

the largest group of investment professionals, complemented
by talent from markets we invest in. Regardless of role or
location, we are OneGIC, a team engaged in the common
pursuit of successfully investing Singapores reserves
and securing Singapores financial future.

LE ADERSHIP CHANGES

WHERE OUR INVESTMENT PROFESSIONALS IN OTHER OFFICES COME FROM

31 MARCH 2015

GICs leadership development programmes identify and

develop capable leaders across the organization. We need
a continuing flow of people who are highly capable and

9%

deeply committed to the sustained performance of the

Singapore

company. Six new Managing Directors were appointed in

July 2015 Mr Vincent Cheang, Ms Madeleine Cosgrave,
Mr Adam Gallistel, Ms Jennifer Lewis, Mr Eric Wilmes
and Mr Maverick Wong.

29%

Americas

30%

Asia, Australasia and Africa

Managing Directors Mr Chua Lee Ming, Ms Tia Miyamoto

and Mr Chan Chun Hong retired from GIC between
January 2015 and June 2015. We are deeply grateful
for their many years of loyal service and their valuable

32%

Europe

contributions to GIC.

62

OUR PEOPLE

OUR ALUMNI NE T WORK

functional areas in GIC, and mentoring by experienced

The GIC School is the hub for our learning and

We value every opportunity to reconnect with our

GIC professionals. Graduates of the GPP are deployed to

development activities. It works together with our staff

former staff and keep them updated on developments

a business area which prepares them for a career in GIC.

to identify training needs, and collaborates with internal

in GIC. Twice a year, we hold gatherings for our alumni

and external partners to provide learning solutions.

communities in Singapore, New York and London through

We offer internships to promising undergraduates and

There is a Foundation Programme for every employee

GIC Connect, our 400-strong global alumni network.

postgraduate students to provide practical insights

grade level, to ensure that all in GIC are clear about the

into the fund management business, and to consider a

expectations, responsibilities and challenges of their

possible career with GIC.

grades and the competencies required. The School

RECRUITING TALEN T
Our people operate across multiple geographies and

helps to institutionalise the knowledge and experience

diverse investment sectors. We invite applications from

Besides our entry level programmes, GIC also recruits

of our people by having in-house subject matter experts

around the globe and from varied academic backgrounds.

seasoned professionals who are experts in their fields

deliver practitioner-led workshops on investment and

We are highly selective in whom we recruit because we

of specialisation. The bar for such entrants is high as

management topics.

seek talented individuals who have the drive and energy

we see them as self-starters and guides who will add

to excel, the courage to innovate and learn, the analytical

value to existing business capabilities or develop new

As a large global fund manager investing across asset

ability and resourcefulness to sustain high performance,

ones. We look to them to be teachers and mentors to

classes, we offer exceptional development exposure

and the willingness to be team players sharing the

their younger colleagues.

opportunities through attachments with fund managers,

corporate mission. Above all, they must have a deep

postings to overseas offices and rotations to different

RE WARDING AND DE VELOPING OUR PEOPLE

parts of the business. Our leaders and supervisors take

We ensure rewards are aligned with performance and

an active role in developing staff by leading learning

The GIC Professionals Programme (GPP) recruits recent

contribution over a period rather than simply over a single

communities, as well as facilitating workshops and

graduates from around the world for a high-intensity

year. We also demand that actions and behaviours be

internal case studies.

training programme which includes a boot camp

consistent with our values and principles.

resonance with our PRIME values and The GIC Way.

on the fundamentals of investing, rotations to various

63

OUR PEOPLE

TO EMPOWER AND ENGAGE

YEARS IN GIC

We believe a culture of enterprise and innovation is

31 MARCH 2015

critical to our business success. We empower our people

to express their creativity in ways that will benefit GIC
through an umbrella programme, ACE, which stands for
Agile, Creative and Enterprising. ACE covers initiatives
that harness the energy and imagination of our people

17%

15 years

at all levels.

10%

We believe in communicating promptly and openly

10 to <15 years

44%

<5 years

with our people as we value their feedback and views.

Through an array of platforms, we reach out to staff,
on a company-wide basis, on important organizational
developments, as well as through smaller, specific

29%

5 to <10 years

groups on operational matters.

64

OUR OFFICES

LONDON

SAN FR ANCISCO

NE W YORK

BEI JING

SEOUL
TOK YO
SHANGHAI

MUMBAI

SINGAPORE
SAO PAULO

65

GIC PRIVATE LIMITED

168 Robinson Road #37-01 Capital Tower Singapore 068912
www.gic.com.sg