GIC's annual return last 30 yrs comparable to equities' 10.2 pct

SINGAPORE Mon May 9, 2011 8:56am EDT

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SINGAPORE May 9 (Reuters) - The Government of Singapore Investment Corp (GIC) has achieved returns comparable to equities since its inception 30 years ago, but with less risk, Chairman Lee Kuan Yew said on Monday.

"Compared with the popular high-return asset class of equities, which returned 10.2 percent per annum in U.S. dollar terms since 1981, the GIC portfolio made comparable returns with lesser risk, Lee said at a dinner to mark the sovereign wealth fund's 30th anniversary.

He added the returns outpaced global inflation by a comfortable margin.

"The next 30 years looks challenging (and) the investment outlook could be less benign," said Lee, Singapore's first prime minister and the father of current Prime Minister Lee Hsien Loong.

GIC, one of the world's largest sovereign wealth fund, manages around $300 billion. Its investments include stakes in UBS and Citigroup , which it helped rescue in the aftermath of the financial crisis.

GIC said in September last year it managed an average return of 7.1 percent a year in U.S. dollar terms in the 20 years to March 2010, up from 5.7 percent per annum for the two decades ended March 2009.

Lee said the global economic environment appeared "unusually uncertain".

"It will take time to work through the full consequences of the crisis, such as the huge amount of debt the developed world has taken on," Lee said, adding the turmoil in the Middle East has elevated geopolitical risks.

Lee said GIC must be prepared to take decisions that may appear unconventional to perform better than its peers.

"As GIC grows larger and more established, the impetus to follow conventional practices will grow stronger. This could lead to mediocrity." (Reporting by Kevin Lim and Saeed Azhar)

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