What is the Government of Singapore Investment Corporation (GIC)?
The Government of Singapore Investment Corporation (GIC) manages Singapore’s sovereign wealth fund. GIC Private Limited is its new name. Since 1981, the GIC has actively invested the sovereign wealth fund in higher-yielding asset classes over a longer investment horizon. According to the Sovereign Wealth Institute, GICS is the world’s eighth-biggest sovereign wealth fund, with $390 billion in assets under management as of mid-2018.
GIC is one of three reserve management institutions in Singapore, along with MAS and Temasek Holdings.
Understanding GIC
The Government of Singapore and the Monetary Authority of Singapore use the Government of Singapore Investment Corporation (GIC) to handle finances. Despite its typical corporate form, the Singaporean “Fifth Schedule” firm GIC has two distinctive qualities. First, the President of Singapore must approve director and senior manager appointments and removals. Second, Singapore’s auditor-general audits GIC financial accounts. Some of the GIC’s directors and essential personnel are famous Singaporean government officials, while others are private sector independents.
The fund has financial assets like other sovereign wealth funds. In-house management drives 80% of the portfolio. The fund has kept a low profile but was opportunistic like other sovereign wealth funds during the 2007–2010 U.S. housing crisis.
GIC Investment Results
Annual profit and loss statements from GIC do not include fund specifics. Disclosing specific numbers would expose Singapore’s financial reserves, allowing speculators to trade against the Singapore dollar during market and economic instability. However, the fund discloses five-, 10-, and 20-year performance and risk management indicators.
GIC outperformed world inflation by 3.4% annually during the 20 years ending March 31, 2019. Over 20 years, the reserves’ worldwide purchasing power roughly doubled.
The Santiago Principles
In 2008, GIC collaborated with the Abu Dhabi Investment Authority and the U.S. Treasury to create the nine generally accepted principles and practices for sovereign wealth funds (SWFs) and recipient nations. These underpinned the Santiago Principles, a voluntary set of 24 standards that promoted good governance, accountability, transparency, sensible investment, and a stable and open investment climate. More than 20 SWFs, including GIC, follow the Santiago Principles.
Conclusion
- Three financial bodies, including the Government of Singapore Investment Corporation (GIC), handle Singapore’s financial assets.
- The GIC’s mandate as a sovereign wealth fund is to invest long-term to maintain and improve the worldwide buying power of its managed funds.
- GIC manages $400 billion in assets.
