Friday, July 29, 2011

China’s Sovereign Wealth Fund Earns 11.7% Return In 2010

China’s $400 billion sovereign wealth fund garnered 11.7% in 2010 on its overseas investments, which included a 21% allocation to alternative investments.

The Chinese Investment Corporation’s total assets reached $409.58 billion at the end of 2010, meaning it’s doubled since its inception in 2007 and even increased significantly from 2009, when it was worth $332.39 billion.

The sovereign, established to manage some of China’s $3 trillion foreign exchange reserves, recorded a net profit of $51.5 billion in 2010, according to its annual report, published this week.

In his opening message, CIC Chairman and CEO Lou Jiwei called 2010 a year of “significant growth” for the fund, saying:

“We reduced our cash holdings and increased our investments in alternative assets with a view to further diversifying our portfolio. We entered the year with 32% of our global assets in cash and ended the year with cash accounting for only 4% and USD 35.7 billion worth of newly deployed investment. As a long-term investor, deployment of our capital in 2010 was weighted towards private equity, infrastructure and other direct investments, guided by our strategic asset allocation plan. The return on our global investment portfolio was 11.7% in 2010 and the cumulative annualized return was 6.4% since our inception in September 2007.”

CIC said it had invested nearly half of its $135.1 billion global portfolio in equities by the end of last year, while fixed-income securities made up 27% of its overseas investments.

The investment return of 11.7% was the same as in 2009.

CIC was "cautiously positive" about the outlook for this year and would "pursue overseas investment with prudence,” said Lou.

Source: www.finalternatives.com

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