GIC posts 3.9% annualised real return over 20 years

Figure is lowest in four years, in the wake of lower returns and stubborn inflation

- Claire Huang

Sovereign wealth fund GIC posted its weakest 20-year rolling returns in four years, on the back of lower returns in recent years and stubborn inflation.

GIC, one of three entities that contribute to Singapore's reserves, reported a 3.9 per cent annualised rolling 20-year real rate of return for the financial year ended March 31, 2024. This figure factors in inflation. The latest rate of return, which spans April 2004 to March 2024, is down from 4.6 per cent in 2023, 4.2 per cent in 2022 and 4.3 per cent in 2021.

The annualised nominal return, which does not account for inflation, came in at 5.8 per cent in US dollar terms reflecting how global inflation has chipped away at returns.

In July, the International Monetary Fund maintained its April forecast that global inflation is expected to decline steadily, from 6.8 per cent in 2023 to 5.9 per cent in 2024 and 4.5 per cent in 2025.

The nominal return of 5.8 per cent means US$1 million invested with GIC in 2004 would have grown to roughly US$3.1 million (S$4.17 million) today.

The 2024 figures are the lowest in four years, when the annualised US dollar nominal rate of return over a 20-year rolling period as at endMarch 2020 stood at 4.6 per cent, while the 20-year real rate of return was 2.7 per cent.

The group's chief executive Lim Chow Kiat said in its annual report on July 24 that in the early 2000s, specifically around 2003 and 2004, there was exceptional recovery in equity markets after the dot.​com crash.

But this particular period has dropped out of the rolling 20-year real return window.