China Investment Corp (CIC) is contacting almost 100 foreign asset management firms and considering small-scale overseas investments to achieve a highly diversified portfolio for better long-term returns, says Jesse Wang, vice-president of the mainland sovereign wealth fund. Mr Wang said CIC, with the help of international consultants, had already designed an asset allocation strategy that involved seven major categories and 16 detailed investment strategies. 'CIC would implement these strategies step by step. Overall, we like to invest for the longer term because this would help to smooth out the short-term stock market volatilities,' he told told Xinhua. He said CIC would invest in a mixed portfolio including low-risk stocks and higher-risk, higher-return items such as private equity funds or hedge funds. 'Establishing a risk management system and hiring the right persons are the priorities for CIC,' he said. David Lui Yin-tat, chief executive of Bank of Communications Schroder Fund Management, said CIC had invited global fund houses to bid for the mandate for foreign investments. 'CIC is catching up with international practice. It is common for the sovereign wealth funds to appoint international fund managers to invest for them. This will diversify the risk portfolio and enhance returns for the funds,' Mr Lui said. The company, set up in September last year with US$200 billion in assets, is under pressure to make better returns as its two high-profile deals underperform. In June last year, it paid US$3 billion for a 9.3 per cent stake in Blackstone Group's initial public offering. Since then, Blackstone shares have lost more than 40 per cent in value. CIC in December last year spent US$5 billion for a 9.9 per cent stake in Morgan Stanley through a bond that would convert into equity in 2010 and carry a 9 per cent annual yield. The United States investment bank has seen its share price fall further. Amid politicians' suspicions about the motives of sovereign wealth funds, Mr Wang said CIC would increase its transparency gradually provided the move would not hurt its commercial interests. Kennedy Wong Ying-ho, a member of the Chinese People's Political Consultative Conference, yesterday proposed that Hong Kong host a high-level forum for sovereign funds to exchange views and seek ways to boost their transparency.