GIC, Temasek reshape hedge fund investment strategies

Singapore’s two largest state investors are restructuring their approaches to hedge fund investments.

GIC is replacing its external managers head, Betty Tay, who plans to retire, with Kwong Hong Huat, and is hiring additional staff for its external managers team.

GIC, which manages about US$936 billion, allocates around 1.5% of its assets to hedge funds, according to estimates.

Temasek is expanding its external hedge fund investments, reaching out to global managers and planning to manage these assets through a new Temasek Partnership Solutions unit from April.

The firm, with a net portfolio value of S$434 billion (US$342 billion), has invested in about 10 hedge funds, including Citadel, and aims for double-digit returns.

🔗 Source: Bloomberg

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Implications, context, and why it matters.

Performance scrutiny precedes Singapore state funds’ strategy shifts

The moves come after public and parliamentary scrutiny of investment returns at the funds 1.
Members of Singapore’s Parliament asked whether GIC and Temasek delivered satisfactory risk-adjusted returns, and how to compare them to benchmarks given different mandates and risk profiles 1.
GIC said “prudent de-risking measures” led to some “foregone returns,” while Temasek’s results took a hit from exposure to the Chinese market 1.
GIC reshuffled and hired in its external managers department, while Temasek widened its search for hedge funds, including a push for double-digit returns from some hedge fund bets and a plan to move hedge fund allocations into a new Temasek Partnership Solutions unit starting in April 2.

A tougher market may reward hedge funds offering diversification

Shifts by large investors like GIC and Temasek can shape expectations across asset management.
Temasek’s chief investment officer said interest in “multi-strategy and macro hedge funds” ties to a need for returns that diversify exposure 2.
New specialist teams plus leadership changes may raise the bar for due diligence (the investment vetting process).
More pressure on hedge funds may follow, with firms needing to prove distinct value and capital concentrating among fewer top performers.