By Lee U-Wen

THE government yesterday said that it would continue to review, from time to time, its investment guidelines for the Government of Singapore Investment Corporation (GIC).

Factors that are taken into consideration include whether existing guidelines are still appropriate given the investment objective and the investment climate up ahead, said Senior Minister of State (Finance and Transport) Lim Hwee Hua in Parliament yesterday.

Replying to questions from MP Penny Low (Pasir Ris Punggol GRC), Mrs Lim added that GIC, with an estimated portfolio of US$300 billion, is expected to achieve reasonable returns over global inflation over the long term.

Over the past 20 years to March 2008, GIC has posted an average annual rate of 5.8 per cent in Singapore dollar terms - 4.5 per cent above global inflation.

GIC deputy chairman and executive director Tony Tan, however, already warned last month that similar profits were unlikely in the current difficult economic climate. He said that he did not expect GIC or any other large investor to be able to reproduce the type of high returns that GIC has been able to deliver over the last two decades.

Mrs Lim said that GIC has 'performed well' over the long term, in accordance with its mandate. 'In the current financial meltdown, GIC investments have lost its value just like any other institutional investors,' she said.

Echoing comments made by Finance Minister Tharman Shanmugaratnam last month, Mrs Lim said that GIC had posted losses in 2008 that were smaller than the decline in global markets after it reduced its equity holdings in the early stages of the financial crisis.

GIC has evolved its asset allocation strategy gradually over the years, she added. In its infancy, GIC's focus was primarily on fixed income instruments, but has since grown its allocation for higher risk and higher return investments such as alternative investments and equities.

'These evolutions have resulted in more diversified and a more balanced portfolio, aimed at achieving long-term returns, but keeping to an acceptable risk level,' she said. 'The investment approach of seeking to achieve reasonable returns above global inflation within overall risk tolerance parameters set by the government is appropriate for our purpose.'

She noted that GIC's long-term approach in investment management has enabled it to ride through the cycles including the current downturn.

She added that it was therefore inappropriate to compare GIC's investment performance with other institutional investors because their time horizon and investment objectives are different.