Singapore wealth fund GIC warns of bleak prospects
Singapore sovereign wealth fund GIC, which manages more than US$100 billion of the city state's foreign reserves, warned of a tough investment outlook over the next decade as global central banks withdraw ultra-easy monetary policies.
GIC said the prices of all major asset classes had been inflated by the massive stimulus measures, and now faced weak future returns.
"Global financial markets have been recovering strongly from the 2008-09 global financial crisis, supported by low interest rates and unconventional monetary policies," it said in its annual report.
As central banks unwind monetary stimulus measures and interest rates increase, "financial assets will see diminished returns", it said.
The United States Federal Reserve is expected to end multibillion-dollar bond purchases in October, winding up a five-year stimulus effort to support the world's biggest economy. The European Central Bank has said it will reassess its stimulus measures at the end of this year.
"The investment environment for the next 10 years will therefore be more challenging for global investors, including GIC," the fund said.
GIC said its assets earned a 4.1 per cent annualised real rate of return over the past 20 years in the year to March, almost the same as the previous year's 4 per cent. It does not report the value of its assets.
Lim Siong Guan, GIC's president, said the fund was committed "to ride out significant short-term volatility and focus on long-term fundamentals".
Last year, it unveiled an investment strategy that split its global portfolio into three segments, a move it said was in anticipation of a "more challenging and complex investment environment".