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[h=2]What GIC does not reveal raise alarms and red flags[/h]
August 25th, 2011 |
Author: Contributions
Dr Tony Tan has been with GIC since its inception. It reveals nominal returns but not ABSOLUTE returns. Nominal returns only apply well to closed end funds. GIC gets fresh capital very often from budget surpluses and net inflow of Singaporeans’ hard earned Central Provident Funds. Hence, absolute returns ought to be revealed because nominal returns can mislead and hide unpleasant or even ugly truths.
Allow me to provide a simple illustration. Closed End Fund Manager started year one with $1 billion. The fund went up 200 percent. He ended year one with $3 billion. In year two, the fund went down by 50 percent. He ended year two with $1.5 billion. Nominal returns says that the closed end fund had 50 percent returns over two years or 20-odd percent annualized returns per annum. His absolute returns over two years is half a billion dollars. The nominal returns is reliable because there was no fresh inflow of capital from third parties.
Super Marketing Fund Manager started year one with $1 billion. The fund went up 200 percent. He ended year one with $3 billion. However, due to his great marketing skills and the millions of middle class people and poor folks who entrust him with more money, he started year two with $100 billion to manage (ie, there was a new money infusion of $97 billion to the fund). In year two, the fund went down by 50 percent. He ended year two with $50 billion. He has LOST $50 billion in year two. Yet, nominal returns says that Super Marketing Fund Manager also had 50 percent returns over two years or 20-odd percent annualized returns per annum. However, his absolute returns over two years is $2 billion minus $50 billion. In other words, he lost $48 billions. Yet, his nominal returns gives the impression that he has a remarkable track record.
For the above reasons, GIC must declare its absolute returns before the upcoming Presidential Elections. This is especially so because bank tycoon Dr Tony Tan’s purchase of two foreign banks has caused Singaporeans to lose many billions dollars.
.
JOSEPH TAN
* John Tan blogs at http://singaporereserves.blogspot.com
Dr Tony Tan has been with GIC since its inception. It reveals nominal returns but not ABSOLUTE returns. Nominal returns only apply well to closed end funds. GIC gets fresh capital very often from budget surpluses and net inflow of Singaporeans’ hard earned Central Provident Funds. Hence, absolute returns ought to be revealed because nominal returns can mislead and hide unpleasant or even ugly truths.Allow me to provide a simple illustration. Closed End Fund Manager started year one with $1 billion. The fund went up 200 percent. He ended year one with $3 billion. In year two, the fund went down by 50 percent. He ended year two with $1.5 billion. Nominal returns says that the closed end fund had 50 percent returns over two years or 20-odd percent annualized returns per annum. His absolute returns over two years is half a billion dollars. The nominal returns is reliable because there was no fresh inflow of capital from third parties.
Super Marketing Fund Manager started year one with $1 billion. The fund went up 200 percent. He ended year one with $3 billion. However, due to his great marketing skills and the millions of middle class people and poor folks who entrust him with more money, he started year two with $100 billion to manage (ie, there was a new money infusion of $97 billion to the fund). In year two, the fund went down by 50 percent. He ended year two with $50 billion. He has LOST $50 billion in year two. Yet, nominal returns says that Super Marketing Fund Manager also had 50 percent returns over two years or 20-odd percent annualized returns per annum. However, his absolute returns over two years is $2 billion minus $50 billion. In other words, he lost $48 billions. Yet, his nominal returns gives the impression that he has a remarkable track record.
For the above reasons, GIC must declare its absolute returns before the upcoming Presidential Elections. This is especially so because bank tycoon Dr Tony Tan’s purchase of two foreign banks has caused Singaporeans to lose many billions dollars.
.
JOSEPH TAN
* John Tan blogs at http://singaporereserves.blogspot.com
