GIC evolves TPA in investment framework overhaul centred on economic drivers and flexibility

GIC has further refined its total portfolio approach by moving to a strategic portfolio focused on underlying factors that drive returns. Split between equities, fixed income and real assets, the revision means the fund can move more easily between private and public exposures and nimbly between asset classes.

In its 2026 annual report, GIC said the three new broad buckets will focus capital allocations on capturing global growth (equities), navigating uncertain rate environments (fixed income) and enhancing resilience against inflationary shocks (real assets).

The fund overhauled its investment framework after 13 years, terminating its 65/35 equities-to-bonds reference portfolio as the fund looks to be “better adapted to the changing investment conditions”.

Since April, GIC has adopted a new two-pronged investment framework consisting of this strategic portfolio and the GIC portfolio. It’s a departure from the legacy framework which was a three-tiered structure consisting of the reference portfolio, the policy portfolio and the active portfolio.

The new framework will push it towards “stronger active management and skill-based strategies”, GIC said in its annual report and allows for more granular asset allocation and capturing opportunities during market dislocations.

GIC believes the upcoming investment environment is one that will be defined by more protectionist government policies around critical sectors, continued challenge to US exceptionalism but a lack of equally mature markets, and uncertainties around the AI-driven productivity boost.

The fund tipped higher and more volatile inflation alongside a possible increase in global bond supply given the rising sovereign debt, which means a continuation of higher bond yields compared to the pre-COVID era. 

“Low term premia suggest that medium-term risks around both inflation and deteriorating fiscal dynamics are not yet fully priced in,” the fund said in the annual report.

“In response, our fixed income and multi-asset department is increasingly focused on multi-asset investing. The broadening of investment capabilities in cross-asset macro and multi-asset credit will enable them to better navigate the evolving investment landscape.”

In the legacy set-up, the reference portfolio sat across the top and served as a risk appetite guideline of GIC’s client, which is the Singapore government. The policy and active portfolios together made up the actual GIC portfolio, with the former comprising allocation among six core asset classes and the latter representing “active, skill-based” strategies aimed at outperforming the policy portfolio.

Since adopting this setup 13 years ago, active strategies contributed 52 basis points of gross alpha above the policy portfolio.

GIC stopped the long-term practice of publishing the performance of its reference portfolio this year. But in its 2025 disclosure, GIC portfolio’s annualised nominal return in US dollars over 20 years (5.7 per cent) underperformed the reference portfolio (6.2 per cent).

Now the new strategic portfolio will become the client risk and long-term return guideline, though the specific target split between equities, fixed income and real assets isn’t disclosed.

It essentially leaves the fund with more flexibility to allocate capital – for example, it can now more easily shift capital between public and private equities without separate equities baskets, and capture infrastructure and real estate more effectively across the physical asset spectrum.

The GIC portfolio, meanwhile, will include alternatives investments and strategies designed to add value to the strategic portfolio through “granular asset allocation, bottom-up security selection, and value creation”.

“This [new investment framework] demands stronger active management and skill-based strategies,” the fund said in the annual report.

In terms of total fund exposure, equities continue to represent the biggest piece of the pie at 53 per cent – a slight increase from last year – while fixed income and real assets both dipped compared to last year and each sat at 22 per cent at the end of March.

Investments in Americas claim over half (53 per cent) of the portfolio, followed by APAC (22 per cent) and EMEA (19 per cent).

GIC reports its return on a 20-year annualised rolling basis, with that number sitting at a six-year low of 3.4 per cent at the end of March. In US dollar nominal return terms, the annualised rate was 5.6 per cent.