S'PORE REVEALS MANAGEMENT OF ITS SOVEREIGN WEALTH FUND By Zakaria Abdul Wahab

SINGAPORE, Sept 23 (Bernama) -- The trade secrets of Singapore government's
huge sovereign wealth fund and foreign investment arm are out.

The workings of the fund, the Government of Singapore Investment
Corporation or better known as GIC, was made public by its Deputy Chairman and
Executive Director Dr Tony Tan when he presented the first "Report on the
Management of the Government's Portfolio for the Year 2007/08" here Tuesday.

The release of the 48-page report is a significant milestone in GIC's
27-year history as it described how GIC is managed, how it invests its funds
and develops its people and how its portfolio has performed globally since it
was set up in 1981.

GIC, one of the world's largest fund management companies, boasts a
portfolio of US$100 billion.

The Singapore government has another similar huge foreign investment arm in
Temasek Holdings which manages a portfolio of over US$134 billion.

Tan said he had hinted about the report when he attended the World Economic
Forum meeting in Davos, Switzerland, in January, where he stated that the GIC
was preparing to put out a formal document to provide more information on its
purpose, processes, governance, goals and values.

He said the GIC, a professional fund management company responsible for
investing Singapore's reserves, believed such clarity and disclosure would
benefit and raise the understanding of both the Singapore public and the
international investment community.

There was clearly much interest in how GIC invested and operated with the
global spotlight trained on sovereign wealth funds in the past two years, he
said.

He assured that GIC had and would always invest for only one purpose, "to
achieve sustainable financial returns for the Government of Singapore's assets".

On the report, Tan said GIC's nominal annual rate of return over the
20-year
period ended March 31 this year was 5.8 per cent in Singapore dollar terms or
7.8 per cent in US dollar terms.

He said GIC's investment objective was to achieve a reasonable rate of
return above global inflation with due regard to risks.

GIC had met the investment objective by achieving an annualised real return
of 4.5 per cent over the same 20-year period, despite global shocks like the
dotcom bubble burst, the Asian financial crisis and the ongoing credit turmoil
in the international financial markets, Tan said.

He said the one key strategy had been the way GIC diversified its asset
class distribution over the years, always focusing on long-term financial
gains.

While public equities still made up the bulk of investments, GIC has also
moved into asset classes like real estate, private equity and other alternative
instruments.

On its governance, he said, the Finance Ministry provided the funds, paid
GIC a fee and set investment objectives and risk parameters.

Within GIC itself, Tan said the separation of roles and functions was clear
with its board of directors responsible for setting asset allocation strategies
and the overall performance of the portfolio.

The management team executed these strategies with full autonomy to decide
where and how to invest within pre-determined parameters, he added.