Singapore's sovereign wealth fund GIC has announced plans to invest an additional $30 billion in hedge funds over the next three years while expanding its artificial intelligence exposure across various sectors. According to Reuters, this strategic shift comes as the fund reported its weakest 20-year real rate of return since 2020, with the annualized 20-year real rate of return dropping to 3.4% for the period ended March 31, 2026, compared with 3.8% a year earlier. The fund's annualized nominal return of 5.6% in U.S. dollar terms has nearly doubled the real value of reserves under management over the past two decades, while reserves have tripled in nominal terms before inflation. GIC CEO Lim Chow Kiat attributed the softer long-term returns partly to the fund's deliberate decision to reduce portfolio risk in recent years, focusing on greater diversification and lower risk exposure consistent with its long-term mandate.
As reported by Reuters, GIC's Group Chief Investment Officer Bryan Yeo confirmed that the fresh hedge fund capital will be deployed across global macro, quantitative and multi-strategy hedge funds, which are viewed as well-positioned to navigate volatile markets and rapidly changing economic conditions. The fund has already tripled its hedge fund investments over the past decade, underscoring its growing preference for flexible investment strategies capable of adjusting portfolios as market conditions evolve. Despite concerns over elevated valuations across parts of the AI sector, GIC remains optimistic about artificial intelligence as a long-term investment opportunity, investing across multiple segments including infrastructure, AI technology companies, and businesses integrating AI into their operations. The fund acknowledged that rapid investment in semiconductors, data centres, power infrastructure and AI models has increased the challenge of identifying long-term winners, while closely monitoring concentration risks arising from heavy investor interest in AI-related assets.
According to Reuters, GIC has adopted a refreshed investment framework from April 1 designed to improve its ability to reallocate capital in an increasingly unpredictable investment environment. Under the new structure, investments are organized into three broad categories: equities, fixed income and real assets, representing growth, income and inflation protection respectively. As of March 31, equities accounted for 56% of GIC's portfolio, up from 51% a year earlier, while fixed income declined to 22% from 26%. Real assets remained unchanged at 22%, with the Americas continuing to be the fund's largest regional exposure at 53% of the portfolio. The vast majority of GIC's portfolio remains invested outside of Singapore, with the US remaining its biggest investment market and 53% of assets allocated to the Americas, up from 44% in 2024.
As reported by Reuters, GIC has ceased publishing returns of a reference portfolio that represented client risk tolerance, having regularly underperformed it on returns while delivering better volatility. The fund's nominal 10-year annualized returns hit 6.2%, up from 5% a year earlier. The investment giant continues to grow despite challenges, with 56% of its portfolio classified as equities as of March, with the rest split evenly between fixed income and real assets. The fund has raised its bar for underwriting over the last two years and is actively recycling capital across private market strategies while remaining selective in private equity deployment. GIC's growing emphasis on AI follows a similar strategy adopted by Singapore state investment firm Temasek, which recently said it plans to increase AI-related investments to 15% of its portfolio by 2031, up from 6% currently, after reporting a record net portfolio value.
