COS 2021: Performance of Sovereign Wealth Funds

Mr Leon Perera (Aljunied): Mr Chairman, Temasek and GIC, no doubt compare their performance against various global market indices and other standards of performance internally. It would be useful for these Sovereign Wealth Funds (SWFs) to publish these comparisons in the analysis for the reasons for better assessment of their performance. In fact, it would be useful for the Government in the form of MOF to understand these comparisons in some detail.

With that said, I would like to ask how does the MOF itself assess that the SWFs Boards and management have done a reasonable job in terms of returns. What internal metrics, indices and benchmarks and processes are used?

In the case of Temasek, the MSCI is used as a reference. As I understand it, Temasek also sets its own hurdle rate at a risk adjusted cost of capital that its market value TSR has under-performed on the one, three, 10 and 20-year periods, as of March 2020. It has argued that its under-performance relative to the risk adjusted cost of capital is because it is making a systemic shift to build resilience for the future. I would like to ask does the Government have clarity on the transformation Temasek is undertaking and why they think the future rate of return will outperform the current rate of return on these new investment strategies?

Ministry of Finance
26 February 2021

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