June 19, 2009
Temasek outdid key benchmarks
Long term, it did even better than Buffett
By Alvin Foo
SINGAPORE investment agency Temasek Holdings may have taken a hit recently on some of its high-profile banking investments, but over the longer term it has outperformed key global benchmarks.
Figures obtained by The Straits Times show that over a 10-year period to March this year, Temasek outgunned several closely-watched equity indexes.
It also beat other notable long-term investors such as Berkshire Hathaway, a top US investment company headed by billionaire Warren Buffett.
Temasek's performance has come under scrutiny in recent months after it suffered significant losses earlier this year on investments in Western banks Barclays and Bank of America (BoA).
The state investment house delivered an annualised total shareholder return by market value of 5.4 per cent from March 1999 to March this year, assuming the value of its portfolio remained unchanged since November last year. That is the date of the last available update of the value of its investments.
This compares with a return of 4.5 per cent over the same period for the MSCI Asia Pacific excluding Japan index, 3.1 per cent for the MSCI Singapore index, and -3 per cent for the MSCI World index, according to figures obtained by The Straits Times.
MSCI indexes are key indicators commonly used by institutional investors to see how well they are doing relative to the market.
Temasek's main investments are in stocks, with the bulk of its assets in Singapore and Asia, so these indexes are regarded as a useful gauge of its performance.
Temasek's returns were also better than that of long-term investors like Swedish investment firm Investor AB, which delivered 3.7 per cent, and Berkshire Hathaway, which yielded 0.7 per cent.
Last month, Finance Minister Tharman Shanmugaratnam told Parliament that Temasek has performed 'respectably' compared to relevant market indexes and reputable institutional investors.
He said Temasek achieved total shareholder returns by market value of slightly over 15 per cent per year on average in US dollar terms from March 2003 to November last year. This compares with 6 per cent annualised gain in the global equity market indexes (MSCI World), Mr Tharman noted.
A weighted index of world, Asian and Singapore indexes would have 'delivered more than 6 per cent', but still 'significantly less' than Temasek's gains of 15 per cent a year, he said then.
During the March 31 to Nov 30 period last year, Temasek's portfolio had plunged $58 billion - from $185 billion to $127 billion - a fall of 31 per cent.
In comparison, the MSCI Singapore index sank 44 per cent while the MSCI Asia ex-Japan Index dived 45 per cent during the same time-frame.
According to a recent estimate made by Nomura analysts, Temasek's portfolio rebounded by nearly 13 per cent from late November to mid-May as global financial markets recovered. It bounced back to an estimated $143 billion as of May 15 - a 12.5 per cent rise from the $127 billion seen in late November last year.
However, Temasek has also suffered public criticism for losses made on its investments in Barclays and BoA.
Temasek sold its BoA holdings in the first three months of the year, leading to estimated losses of between US$2.3 billion (S$3.3 billion) and US$4.6 billion.
It also sold its Barclays stake in December and January, at an estimated loss of between £500 million (S$1.2 billion) and £600 million.
Told of Temasek's 10-year returns compared to other indicators, analysts said the investment house did reasonably well.
However, they were also quick to point out that it was not a fully indicative comparison, as their investment objectives and risk appetite may differ, and they are accountable to different parties.
It is not strictly comparable with the MSCI indexes because the latter comprise listed stocks, while Temasek has both listed and unlisted investments.
Temasek also takes much larger strategic stakes in companies than traditional fund managers, who benchmark themselves against MSCI indexes.
http://www.straitstimes.com/STI/STIMEDIA/pdf/20090619/HowTheyCompare.pdf
Temasek outdid key benchmarks
Long term, it did even better than Buffett
By Alvin Foo
SINGAPORE investment agency Temasek Holdings may have taken a hit recently on some of its high-profile banking investments, but over the longer term it has outperformed key global benchmarks.
Figures obtained by The Straits Times show that over a 10-year period to March this year, Temasek outgunned several closely-watched equity indexes.
It also beat other notable long-term investors such as Berkshire Hathaway, a top US investment company headed by billionaire Warren Buffett.
Temasek's performance has come under scrutiny in recent months after it suffered significant losses earlier this year on investments in Western banks Barclays and Bank of America (BoA).
The state investment house delivered an annualised total shareholder return by market value of 5.4 per cent from March 1999 to March this year, assuming the value of its portfolio remained unchanged since November last year. That is the date of the last available update of the value of its investments.
This compares with a return of 4.5 per cent over the same period for the MSCI Asia Pacific excluding Japan index, 3.1 per cent for the MSCI Singapore index, and -3 per cent for the MSCI World index, according to figures obtained by The Straits Times.
MSCI indexes are key indicators commonly used by institutional investors to see how well they are doing relative to the market.
Temasek's main investments are in stocks, with the bulk of its assets in Singapore and Asia, so these indexes are regarded as a useful gauge of its performance.
Temasek's returns were also better than that of long-term investors like Swedish investment firm Investor AB, which delivered 3.7 per cent, and Berkshire Hathaway, which yielded 0.7 per cent.
Last month, Finance Minister Tharman Shanmugaratnam told Parliament that Temasek has performed 'respectably' compared to relevant market indexes and reputable institutional investors.
He said Temasek achieved total shareholder returns by market value of slightly over 15 per cent per year on average in US dollar terms from March 2003 to November last year. This compares with 6 per cent annualised gain in the global equity market indexes (MSCI World), Mr Tharman noted.
A weighted index of world, Asian and Singapore indexes would have 'delivered more than 6 per cent', but still 'significantly less' than Temasek's gains of 15 per cent a year, he said then.
During the March 31 to Nov 30 period last year, Temasek's portfolio had plunged $58 billion - from $185 billion to $127 billion - a fall of 31 per cent.
In comparison, the MSCI Singapore index sank 44 per cent while the MSCI Asia ex-Japan Index dived 45 per cent during the same time-frame.
According to a recent estimate made by Nomura analysts, Temasek's portfolio rebounded by nearly 13 per cent from late November to mid-May as global financial markets recovered. It bounced back to an estimated $143 billion as of May 15 - a 12.5 per cent rise from the $127 billion seen in late November last year.
However, Temasek has also suffered public criticism for losses made on its investments in Barclays and BoA.
Temasek sold its BoA holdings in the first three months of the year, leading to estimated losses of between US$2.3 billion (S$3.3 billion) and US$4.6 billion.
It also sold its Barclays stake in December and January, at an estimated loss of between £500 million (S$1.2 billion) and £600 million.
Told of Temasek's 10-year returns compared to other indicators, analysts said the investment house did reasonably well.
However, they were also quick to point out that it was not a fully indicative comparison, as their investment objectives and risk appetite may differ, and they are accountable to different parties.
It is not strictly comparable with the MSCI indexes because the latter comprise listed stocks, while Temasek has both listed and unlisted investments.
Temasek also takes much larger strategic stakes in companies than traditional fund managers, who benchmark themselves against MSCI indexes.
http://www.straitstimes.com/STI/STIMEDIA/pdf/20090619/HowTheyCompare.pdf
