Singapore wealth fund warns of tough investment decade

Singapore multi-billion-dollar sovereign wealth fund GIC on Thursday reported a substantial dip in returns and warned of "difficult" global investment conditions over the next decade.

GIC said in a statement its annualised rate of return, excluding global inflation, for the past 20 years fell to 4.0 percent in the year to March 2016, from 4.9 percent in 2015, adding future returns will be challenged by uncertainties caused by the low-yield environment.

"These difficult investment conditions can stretch for the next 10 years," said Lim Chow Kiat, deputy group president and chief investment officer.

"GIC is prepared for this protracted period of all-time low interest rates, modest global growth prospects and high valuations of financial assets," he added.

In the face of a global slowdown, most central banks around the world -- with the notable exception of the US Federal Reserve -- have cut or are considering cutting borrowing costs as they look to ramp up inflation and kickstart their economies.

GIC, formerly known as the Government of Singapore Investment Corporation, manages Singapore's foreign reserves with a focus on long-term performance.

It does not disclose the exact value of its portfolio, saying only that it has "well over US$100 billion of assets" in more than 40 countries, including real estate, equities and fixed-income investments.

The US-based Sovereign Wealth Fund Institute says GIC has $344 billion of assets under management, making it the world's eighth largest.

GIC says 34 percent of its portfolio is in the United States, 20 percent in Asia outside Japan and 11 percent in Japan.

Singapore's other global investment company, Temasek Holdings, this month said its global portfolio suffered its first annual drop since 2009 at the height of the global financial crisis.

Temasek announced that the value of its global assets was Sg$242 billion ($180 billion) by March, down nine percent from last year's record Sg$266 billion.