GIC's mandate is to enhance the international purchasing power of Singapore's reserves. To achieve this, GIC invests globally through systematic diversification across multiple asset classes. This requires a robust and coherent investment process, comprising three levels of decisions.
The first level of decisions is the long-term allocation of funds for the various asset classes based on the clients' investment objectives, time horizon and risk tolerance, and the return and risk expectations of each asset class. This allocation, or policy asset mix, is set by the Board of Directors and is reviewed regularly. In such reviews, the inclusion of new asset classes may also be considered.
The policy asset mix is the performance benchmark for active management of public market assets. The policy asset mix is thus the foundation of our investment process, and helps us keep an unwavering focus on performance.
The second layer of decisions is by the management on how the policy mix should be implemented. Decisions here include the proportion of funds to be actively and passively managed; types of investment strategies to be employed; allocation of risk capital and manager selection.
The third category of decisions is portfolio construction or decisions by portfolio managers. These decisions include currency management; country, industry and sector allocation; yield curve management and security selection.
GIC's actual portfolio is the sum of the decisions discussed above.
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