Tuesday, July 26, 2011

Long term yield on GIC portfolio


GIC reported a 10 year and 20 year yield on their portfolio of 7.4% and 7.2% respectively in USD. I wonder what the yield would have been, if converted to SGD. We know that the USD has depreciated significantly during this period.

I am encouraged by this statement: "GIC's real rate of return in excess of global inflation over the past 20 years -- its main benchmark -- was 3.9 percent as at end-March 2011, up from 3.8 percent at end-March 2010."

However, it might be better if the yield is converted to SGD and the real return is computed net of inflation in Singapore.


6 comments:

yujuan said...

The returns on a 10 year and 20 year basis of 7.4% and 7.2% look reasonably good, though not really impressive.
But to the average Joe, he wants to know also the losses made over the past few years, how much did GIC lose in Citigroup, UBS and the Manhattan Property in new York, or how much of the losses recouped if any. It's good to hear from the horse's mouth, instead of through third foreign parties like Bloomberg or the Financial Times.
May we remind GIC or Temasek Holdings that the funds belong to the citizens of Singapore, and not to the PAP Govt. Transparency and responsibility can't hide behind the Internet anymore.
We are losing TRUST in these two SWFs. We are also losing TRUST in our Regulator, MAS, after the shocking 10.9 billion losses.

Singapore's 5 Minute Investment Diary said...

Exactly.

If I own an Australian rental property, it's only common sense to calculate my return in Singapore dollars.

Because the competing alternative is to sell the Australian rental property and invest in a Singapore rental property.

This is called common sense as opposed to "elite sense".

The 3rd alternative is to sell my passive investments and invest the money in training and educating my son. Investing in my own flesh and blood citizen rather than "hard assets". The potential rate of return is potential limitless if you believe that human potential guided by the right values is limitless.

But then again, I only have common sense to guide me. I lack the "elite sense" to engage in mental masturbation (please pardon my language and simmering anger).

Alan said...

GIC reported a 10 year and 20 year yield on their portfolio of 7.4% and 7.2% respectively in USD. I wonder what the yield would have been, if converted to SGD. Agree.

Jamesneo said...

Hi Mr Tan, The yield converted to SGD will not be so impressive since the US has depreciate by 11% over just one year and 16% over the past two years. It will become stupid to keep investing in US denomiated assets if the depreciation is more than the yield. The long term trend for the dollar as i said before is down due to the need of US to keep printing money to reduce their debt for this coming decade.

John Chia said...

Simple question is: Does these yields take into account the exchange losses (USD to SGD)? Simple mathematics, if the yield does not take this into consideration, and the 10 year exchange loss is conservatively 5% then the nett yield could only be 2.4%... ??

John Chia said...

Does the yield take into account the exchange loss?? We all know the USD has been sliding against the SGD for past 10 years.

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