GIC Boosts Americas Exposure to 49%, Eyes AI Deals in US
North and South America accounted for 49% of GIC's assets as of March, up from 44% a year earlier. Asia-Pacific assets fell to 24% from 28%, according to the fund's annual report released Friday. Europe, the Middle East and Africa were unchanged at 20%.
The shift comes as GIC expects a slowdown in the second half of the year alongside rising inflation and uncertainty driven by domestic and geopolitical pressures. The fund's annualized five-year return rose to 6.1% in nominal US dollar terms, up from 4.4% a year earlier. GIC doesn't publish yearly performance figures.
'The forces of change have clearly intensified and will be much harder to prepare for,' said Chief Executive Officer Lim Chow Kiat. He added in a letter accompanying the report that '2025 may be a turning point in markets — and in history.'
GIC, which consulting firm Global SWF estimates has assets under management of $936 billion, is aiming to ramp up deals in artificial intelligence. Lim cited the technology — and AI's effect on US companies in particular — as a reason why some of its geographic holdings may change.
Global SWF Managing Director Diego Lopez estimated that GIC's annual return was about 10.8%, which he said was 'good but not great.' The firm's 10-year annualized returns of 5% are slightly below average compared with the sovereign wealth funds it tracks, he said.
'It's also way below what a 60/40 traditional portfolio would've returned, which is 7.5% in this period of time,' Lopez said. 'The performance could be better.'
GIC's AI investments in the US include Atlan, and Ramp, a financial operations firm in New York.
'The US is a huge market, continues to be very innovative, and trends like AI benefits the US the most,' because there are many American companies that can leverage the technology, Lim said in an interview. 'To the extent that the US is allowing us to deploy more capital, the percentages in other regions will become smaller.'
Despite the shift away from Asia-Pacific, GIC still sees opportunities there. Group Chief Investment Officer Bryan Yeo said the fund expanded its investment team in Japan over the past year and continues to evaluate deals in India and China. GIC has also anchored several recent initial public offerings in Hong Kong as a cornerstone investor.
'Our base case is really lower growth and, on the margins, higher inflation,' Yeo added. 'We have to get over the higher valuations that we see in India — so it's always figuring out 'is the opportunity in India priced relative to its growth prospects?''
GIC reduced the level of detail it publishes about its investments. For the first time since it began issuing annual reports in 2008, the state-owned investor didn't provide the percentage of its total holdings in any specific country. Nor did it offer specifics on how much of its portfolio sits in developed versus emerging-market equities, private equity or real estate — which it provided in previous years.
Instead, all holdings were categorized by what it labels as equities, fixed income or real assets. GIC said these represent exposure to growth, income and inflation, respectively. That means an asset like gold can sit in a variety of categories depending on how it's used. Inflation-linked bonds — which made up 7% of GIC's portfolio last year — sit within the real assets category alongside property, and not in fixed income.
By these new measures, 'equities' rose to 51% of assets from 46% a year earlier, while 'fixed income' fell to 26% from 32% over the same period. 'Real assets' were largely flat at 23%. Within equities, the fund increased investments in the US, which remains its largest market by capital deployment.
The reduced disclosure from the firm, which doesn't reveal the value of its assets, comes as countries around the world increase scrutiny of foreign investors amid rising populism and national security concerns.
'It's most important to present information in a way that allows you to have a good idea of what GIC's portfolio is like,' said Lim. 'We believe that we are providing sufficient information for the understanding of our stakeholders.'
Lopez said the decrease in fixed income was likely due to the rising valuations of US 'Magnificent Seven' tech stocks and increased deployment in the private equity space across America. And the shrinking allocation to Asia-Pacific was probably from reductions in the value of assets in China and Japan, he added.
But he said GIC's decision to provide much less granular detail on its investments made it hard to be certain, and that its actions matched a trend started by some sovereign wealth funds in the Middle East — which earlier this year similarly cut back on the amount of detail they disclose about their portfolios.
'This reduction in information is quite concerning,' said Lopez. He said the Singapore investor is a signatory member of the Santiago Principles, which advocate for transparency and good governance, yet 'they're becoming less and less transparent with time.'
(Updates SWF's estimate of GIC's assets under management in the fifth paragraph, adds quotes and other details.)
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