GIC and Temasek evaluated on Long-term Portfolio Performance02 Nov 2011
Mr He Weimin commented (LHZB, 17 October 2011) that the Government had the habit of highlighting the long-term portfolio returns of GIC and Temasek when losses on specific individual investments are raised. He says this is just 'packaging' the information, and makes one feel that they will not learn from their mistakes.
2. GIC and Temasek take very seriously the performance of every investment they make. They study carefully the outcome of all investments - good and bad - to derive lessons and provide insights to future investment decisions.
3. The desire for transparency on GIC and Temasek's performance is quite understandable, and both entities have increased their transparency in recent years. However, we have to be clear about the purpose of transparency. More is not always better. In particular, it would be unwise to disclose the annual performance of each investment, including not only those which have done poorly but those which have done well. Doing so will constrain GIC and Temasek's investment strategies in future, in many respects.
4. GIC and Temasek's disclosure allows their performance to be evaluated on the basis of their respective mandates. As with other large professional investment managers, it is only reasonable for their performance to be evaluated on the basis of their overall portfolios rather than by how much they gain or lose on individual investments.
5. Furthermore, it is appropriate for GIC and Temasek to be evaluated on the basis of their long-term performance, because that is the purpose of their investment strategies. This long term orientation allows them to absorb short-term volatility and ride out market cycles, in order to achieve long term gains. Whether they are succeeding in their strategies must be made plain and clear through disclosure.
6. GIC now reports its 5-year, 10-year and 20-year returns in its annual report. The publication of these figures allows for comparison against entities with similar asset mix and mandates. Temasek, which obtains its own credit ratings and issues bonds to private investors, publishes its key financials and investment performance over 1-year, 2-year, 3-year, 5-year, 10-year, 20-year and longer term periods.
7. More information on GIC and Temasek and our reserves can be found at http://app.mof.gov.sg/reserves.aspx
Lim Bee Khim (Ms)
Director (Corporate Communications)
Ministry of Finance