Society: Our money managers

“Are Singapore’s investment giants being left behind?” was the headline of a marvellously reported, and often scathing, look at GIC and Temasek by the Financial Times (FT). Their roughly five percent annual average returns (in US dollar terms) over the past decade means they are “among the weakest performers among 50 similar global organisations over a 10-year period, according to Global SWF data, despite being among the largest and best resourced.” (Comparisons were in nominal terms and without adjusting for the level of risk.)

The FT said that Temasek, with a S$434bn portfolio, “has been beset by a litany of mis-steps, including from its forays in China and with start-ups.” One notable muck-up was its investment in FTX, a crypto exchange later revealed to be a fraud, in which it’s unclear if adequate due diligence was done by Temasek (and other investors). It’s since reduced its exposure to China and dampened its enthusiasm for early-stage investments. “In recognition of the need to make its portfolio more resilient, Temasek is in the middle of a broad restructuring to improve accountability among managers,” the FT said. This will see it split into three entities that correspond to its portfolio: domestic firms (41 percent of assets); global businesses (36 percent); and fund partnerships and asset management companies (23 percent). 

The FT was less critical of GIC—whose portfolio is estimated by Global SWF to be US$936bn (S$1.21trn)—noting its conservatism given a modest remit: “Senior managers at GIC say their explicit mandate from the finance ministry is to beat global inflation by a couple of percentage points, a yardstick it tends to perform well against.” (Even as returns lag a “reference portfolio”.) The article discusses much else, from GIC’s asset allocation strategy and Temasek’s evolving approach to investments in India, the Middle East, and the US, to the drafting of Gabriel Lim, highly-rated civil servant and hitherto prospective politician, to help clean up the mess at Temasek. All this should concern Singaporeans because the two entities, along with MAS, contribute roughly 20 percent of government revenue (in line with the formula dictating how reserves are tapped). Amidst an ageing population and rising healthcare and other costs, we must closely scrutinise how our money is being managed. 

Is there sufficient transparency and accountability at these organisations? Was Ho Ching, a trained electrical engineer, the best person to lead Temasek for almost two decades, overseeing at least some of the “litany of mis-steps”? How much did she earn, and how much do her successors and all the others? (Many funds around the world disclose executive compensation.) Why is it that a newish journalist to Singapore at the FT is able to write such an exhaustive piece, including interviews with numerous sources with ties to these organisations—but our own mainstream media journalists, funded by our money, cannot? These are not new questions. But we must keep asking them.

Some further reading and viewing: responses by academic Donald Low; the 1M65 YouTube channel with a 14min video; and a lively Reddit thread with over a 100 comments.