GIC posts lowest five-year return since 2013 as US allocation increases
Singapore’s sovereign wealth fund saw its five-year annualized return drop to 3.6 percent while significantly increasing its exposure to American equities and artificial intelligence.
GIC reported a 3.6 percent nominal annualized return over the five years ending March 31, marking its weakest performance in that timeframe since 2013. The decline from 6.1 percent the previous year reflects the rollover of the strong 2021 market rally and a failure of bond holdings to fully recover from earlier inflation spikes.
Chief Executive Officer Lim Chow Kiat attributed the subdued results to a deliberate reduction in overall portfolio risk and a challenging macroeconomic environment. "These are recurring forces," Lim said, noting that inflation episodes early in the period negatively impacted both bonds and equities. He added that these forces have left the global landscape more constrained and fragmented.
Despite the short-term dip, the $936 billion fund maintained its focus on longer horizons. The 20-year nominal return stood at 5.6 percent, while the 10-year annualized return actually improved to 6.2 percent from 5 percent a year earlier. The inflation-adjusted 20-year return was reported at 3.4 percent.
The results coincide with a major geographic reallocation that highlights the fund's growing reliance on American markets. GIC increased its Americas allocation to 53 percent from 44 percent in 2024, while its Asia-Pacific holdings dropped to 22 percent from 28 percent. The United States remains its single largest investment destination.
This geographic shift is heavily driven by public equity and artificial intelligence investments in the US, including stakes in Anthropic and Databricks. Lim noted that the American AI sector has produced large companies that allow the fund to deploy more capital effectively. Equities now make up 56 percent of the portfolio, with the remainder split between fixed income and real assets.
Looking ahead, Group Chief Investment Officer Bryan Yeo announced plans to deploy an additional $30 billion into hedge funds over the next three years. The fund has already tripled its hedge fund investments over the past decade. Conversely, GIC is exercising caution in private credit and private equity due to loosening lending standards and high interest rates.
Yeo stated the fund has tightened its underwriting criteria and is actively recycling capital across private markets. "Private equity is also going through a period of challenges because of high interest rates and questions around AI’s impact," Lim said. He emphasized that the fund remains active but highly selective regarding new capital deployment in this area.
Operationally, the investment giant stopped publishing the returns of its reference portfolio, a metric it historically underperformed on returns but beat on volatility. Meanwhile, its push to become "AI Native" has not curbed hiring, as headcount grew to 2,525 employees from 2,370 the previous year.
