Impact of GIC's Divestment in UBS on Rate of Return for Government's Investment Portfolio

Parliamentary Question by Mr Png Eng Huat:

To ask the Minister for Finance what is the impact of GIC's reduced stake in UBS on the performance of the Government's investment portfolio in terms of annualised rate of return for five-year and ten-year time periods respectively and how much is the realised loss of the UBS divestment.by 

Parliamentary Reply by Minister for Finance Mr Heng Swee Keat:

Madam Speaker, GIC’s performance over five- and ten-year periods are published annually by GIC on its website. These figures reflect in aggregate, both realised and unrealised gains and losses of all investments, including UBS. Hence, the reduction of GIC’s stake in UBS does not in itself change these figures. It only changed unrealised losses, which were already reflected in the performance figures, to realised losses.

Mr Png had asked what the realised loss of the UBS divestment was. It is not the Government’s policy to discuss details of specific investment transactions. I would like to reiterate that the investment performance of GIC should not be evaluated based on any single transaction. Rather, the Government’s focus is on GIC’s performance on an overall portfolio basis, over the long term. While it is disappointing that the UBS deal did not turn out as expected, investing is about taking calculated risks in anticipation of returns. Some returns may materialise, some may not. It is not realistic to avoid any loss for every investment as that would require GIC to be completely risk averse.

What is more important and relevant is that the overall portfolio delivers creditable long term returns over and above inflation. As at 31 March 2016, GIC achieved a 20-year annualised rate of return of 4% above global inflation - this includes the investment in UBS.