minority,
Don't be bloody stupid and lying again here!!!!!!!!
cbsh,
You are right,
the actual return is ~3.98% p.a. (if you want to be more precise)!!!!!!!!!!!!!!!!
But then you also highlight a very important point: All good schemes with good deals will be sooner or later be removed (if the terms and conditions can be changed unilaterally while you get stuck and you can't say the other party change the terms & conditions and you can then want out especially with no penalty etc)! I don't see this to be any different from CPF, so I prefer my money not to be stuck and I have no control over it while others can keep changing policies and terms and conditions anyway they like........
With global ETFs, the long-term return has historically been 7-10%.
This is probably higher than GIC's long-term return............
Temasek's claimed return of 17% since inception, well, seems incredibly too good, as that would mean Temasek is as good, if not better the world's undisputed and most acclaimed investor Warren Buffett!
According to media statements, we came to know that: Temasek was incorporated in 1974 as an invesment company with initial capital of S$354 Millions; At 31 Mar 2013, Temasek's asset under management was S$215 Billions or total shareholder return (TSR) 17% p.a. since inception (39 years).
As we know, Warren Buffett is the acclaimed world's best investor (with annualized return of about 17+% too) - best because of longest and highest annualized return track record (and whose record is in the open and everybody can independently verify and see for themselves)........ And now Temasek claimed to be of same level as him? Given that there is no transparency before Temasek start releasing their assets and returns and there is no details about the capital injections into Temasek by the Government, and there is no way for people to independently verify, no wonder there are numerous people who openly doubted Temasek's claimed of 17% return since inception.......... People can read about the doubt raised here..........:
http://www.baldingsworld.com/2013/06...lly-earned-17/
http://fifthestate.co/why-ho-ching-wont-respond-to-me/
http://www.baldingsworld.com/2013/04...valued-assets/
http://www.scmp.com/print/article/10...re-tooth-fairy
There are also heated discussions at Hardwarezone (but this thread has since been removed)!:
http://forums.hardwarezone.com.sg/ea...l#post75806333
(and why did hardwarezone delete the thread totally???)
According to here:
http://www.theonlinecitizen.com/2013...whats-missing/
more questions were made after MOF clarifications.
So, the doubt of Temasek’s return is as follow:
“
Began with $354m in 1974?
In this connection, according to Temasek’s web site – “Value since Inception - Formed in 1974, Temasek began with a portfolio of S$354 million”.
If you compound $354 million for 39 years at 16 %, you get about $116 billion. So, to get to Temasek’s portfolio value now of $215 billion, there were capital injections and "boost" to valuation from listings due to the market valuation of some pre 2002 assets.
With (without data) capital injections & "boost" valuations – how can citizens calculate the return of 16%?
But, here’s where the puzzle or confusion may begin. Since ”The Government injects capital into Temasek from time-to-time as part of the Government’s allocation of fresh flows of funds, and to allow Temasek to plan its future investment strategies” – how can we calculate and analyse the annualised return since inception of 16 % without more information on the capital injections and "boost" valuations?
Why didn’t just give the “capital injections” data?
As if to add to the jigsaw puzzle – the above does not tell you how much these capital injections were? Maybe they are buried somewhere in the last 10 years’ annual reports. As a citizen, or for that matter – no one should have to try to crack his head and try to figure out how much and when the capital injections were made?
To put it simply and bluntly – why didn’t the above just give the “capital injections” data?
$30b capital injection from inception to 2008?
According to a Speech by S Dhanabalan, Chairman (of Temasek), at The Indus Entrepreneurs event on 21 August 2008 – “Since inception, we have received a total injection of a little less than S$30 billion in assets and cash”.
”
However, there is wrong assumption in the above. It is wrong to say “
If you compound $354 million for 39 years at 16 %, you get about $116 billion. So, to get to Temasek’s portfolio value now of $215 billion”.
Actually, if you start with $354M and compound monthly for (39*12) months at (16.55%/12) pm, you actually get about $215 Billion! (But if you compound annually you get $116 Billion as mentioned in the article!)
Actually, if you do a Excel XIRR annualized return calculation assuming that there is no capital injection and there is only $354M capital to start with in 1974, and if you have $215B at then end of 31 March 2013, the annualized return rate is actually ~= 17.7% !!!
(See figure "Return1").
For those who don’t know what is annualized return and using XIRR (in Excel) to calculate them, you can read here:
http://www.investopedia.com/ask/answ...cagr-excel.asp
However, we were also told by Ministry of Finance that:
“
In the case of Temasek, the Government is its sole shareholder. The Government injects capital into Temasek from time-to-time as part of the Government’s allocation of fresh flows of funds, and to allow Temasek to plan its future investment strategies. These capital injections are reflected in Temasek’s accounts and are made public.”.
Also: “
According to a Speech by S Dhanabalan, Chairman (of Temasek), at The Indus Entrepreneurs event on 21 August 2008 – “Since inception, we have received a total injection of a little less than S$30 billion in assets and cash”.”.
But hei, like that means Temasek didn’t include all the new capital/asset injection from Government and also the dividends they received along the way from 1974 to 2013 March??? It still comes back to the same question: Why wasn’t capital injection (and dividends received along the way) included in the computation of Temasek’s return???
This is very important because if you exclude those, your portfolio’s return will be inflated, that is, the calculated return will be much larger than it really is!
If you include $30B of capital injection from inception to 2008 mentioned by S Dhanabalan, Chairman (of Temasek), on 21 August 2008 (and spread them out aga-aga since I don’t know when they were done and the exact amount), the we can estimate that Temasek’s return will be LESS than % 10.73% !!!
(See figure "Return2").
But, if that is the case, wonder why they didn't include dividends received, capital injection made and other cash/asset injection made along the way into the return computation?
So if Temasek didn’t include these dividends received and asset/capital injection etc at market value into their return calculation, then their return cannot be compared apple-to-apple to others internationally like Warren Buffett!
And that bring us back to another question: How does GIC compute their return? Does GIC include fresh capital injections into their computation of their annualized return???
So, now we know that Warren Buffett is still the only undisputed investment "GOD" with annualized return of about 17% (which include all fresh capital injections) that the whole world come to know and accept (despite claim of 17% return by Temasek)..............