Asked about a possible AI bubble, Mr Yeo said GIC aggregates its investments to determine its exposure.
“We ask ourselves: Do we have too much? Do we have too little? Do we have just right?” he said, adding that the fund also considers how correlated its investments are.
He said the non-AI space may be getting neglected, with valuations potentially cheaper there.
“For a long-term investor, if you look out 20 years, you don’t want to have everything in just AI alone,” he said.
Mr Yeo added that it is getting harder to define what counts as an AI investment as the technology becomes more pervasive, requiring GIC to continually reassess its holdings. How quickly or strongly profits in different areas will grow also remains uncertain.
“It’s not just science, it’s also art. Being able to assess, being able to speak with our business partners, speak with our investee companies to understand how narrow and how broad the opportunity set is going to be,” he said, adding that GIC is also focused on disruption risk.
A REFRESHED INVESTMENT FRAMEWORK
GIC began transitioning to a refreshed investment framework on Apr 1. Mr Lim cited two reasons: the world has “fundamentally changed”, and GIC has built up capabilities it should leverage through greater flexibility.
At the heart of the new framework is a strategic portfolio representing the government’s risk appetite and long-term return expectations. It comprises three broad asset groups: equities for growth, fixed income for income and real assets to protect against inflation. GIC did not disclose the weighting of each asset class.
Rather than group by traditional asset classes, GIC will focus on underlying factors that drive returns, which it said allows for more nimble and flexible capital allocation.
For fixed income, GIC will have flexibility to adjust allocations to navigate uncertain rate environments, and can diversify its physical assets for resilience against inflationary shocks.
“These changes will make the GIC portfolio more resilient against future uncertainties, while capturing excess returns across different market cycles,” it said.
