Singapore’s sovereign wealth fund GIC plans to commit an additional $30bn to hedge funds over the next three years, with global macro, quantitative and multi-strategy managers among the areas expected to benefit, according to a report by Reuters.
The planned expansion comes as the long-term performance of the investment giant’s portfolio weakened, with GIC reporting its lowest annualised 20-year real rate of return since 2020.
Group chief investment officer Bryan Yeo said the hedge fund allocation would focus on managers capable of actively adjusting risk and repositioning portfolios as market conditions evolve.
GIC has tripled its global hedge fund investments over the past decade, according to Yeo. The additional $30bn will be deployed over a three-year period.
The move could provide a significant boost to hedge fund managers with the investment capabilities and capacity to accommodate capital from one of the world’s largest institutional investors.
GIC does not disclose its assets under management. The Sovereign Wealth Fund Institute estimates that it oversees approximately $936bn, while Global SWF founder Diego Lopez has estimated that the portfolio’s assets had risen to around $1.16tn by the end of March.
GIC reported an annualised 20-year real return of 3.4% for the period ended March 31, down from 3.8% a year earlier. The measure, which is the fund’s main performance metric, tracks returns above global inflation over a rolling two-decade period.
Chief executive Lim Chow Kiat said the result reflected a more cautious approach to portfolio construction in recent years.
GIC manages part of Singapore’s foreign reserves and aims to preserve and grow their purchasing power over the long term.
The sovereign wealth fund is also taking a more diversified approach to artificial intelligence as concerns grow over crowded trades and the scale of capital being committed to the sector.
GIC executives said they remain positive on the long-term potential of AI but are wary of concentration risk and pockets of overvaluation.
GIC is investing across the AI value chain, including infrastructure providers, companies developing AI products and businesses using the technology to improve their operations.
However, the rapid expansion of investment in chips, data centres, electricity infrastructure and AI models is making it more difficult to identify the companies likely to emerge as long-term winners.
GIC’s approach follows a broader push by Singapore’s state investment sector into AI. Temasek said earlier this month that it aims to increase AI-related investments to as much as 15% of its portfolio by 2031, from 6% currently.
GIC also introduced a revised investment framework on April 1 designed to give portfolio managers greater flexibility to reallocate capital as market conditions become less predictable.
The new framework divides the portfolio into equities, fixed income and real assets, representing exposure to growth, income and inflation protection. Hedge fund investments are allocated across the three categories depending on their strategies and mandates.
Equities represented 56% of GIC’s portfolio at the end of March, up from 51% a year earlier. Fixed income fell to 22% from 26%, while real assets remained broadly unchanged at 22%.
The Americas continued to represent GIC’s largest regional exposure, accounting for 53% of the portfolio.
