Delivering Sustainable Returns over the Long Term
Our basic investment philosophy remains largely unchanged as an owner and investor for the longer term, even as our focus and priorities have evolved with time.
Over the course of our 41 year history, we evolved from investing mostly in Singapore companies growing with a transforming Singapore, to investing in companies in growth economies in Asia and elsewhere.
We have actively extended our investment scope to other economies such as Latin America, North America and Europe and more recently opened offices in London and New York to step up activities in those regions. Our portfolio companies have also increased their global and regional exposure over the years.
Our investment activities remain guided by our four investment themes and the long term trends they represent:
- Transforming Economies
- Growing Middle Income Populations
- Deepening Comparative Advantages
- Emerging Champions
We track investment returns against a risk-adjusted hurdle rate. This drives our investment strategy, capital allocation, performance measurement and an incentive system to deliver over market cycles.
As an investor, we are focused on intrinsic value. Individual investment and divestment decisions are shaped by our bottom-up intrinsic value tests.
As an owner, we maintain full flexibility to reshape and actively rebalance our portfolio as opportunities arise. We are willing to take concentrated positions and do not have limits or targets for asset classes, countries or sectors. We may choose to invest, divest or remain in cash, depending on our view of the cycle. Our capital structure allows us to take a view on long term trends, and weather the cycles of short term volatility.
As a shareholder, we promote good governance. We look to our investee companies’ boards to drive strategy, and their management to manage day to day operations and deliver sustainable long term returns from their respective strategies.
We identify value creation opportunities within our investee companies and engage with the boards and management to share our perspectives, as appropriate, for their consideration.
We continue to invest a part of our portfolio in third party managed funds to deepen our insights in new markets and to open opportunities through co-investment. As at 31 March 2015, about 10% of the portfolio was held in third party managed funds. We also share some of our investment opportunities identified with like-minded co-investors.
From time to time, we may express our interest to invest or divest selected positions through options and warrants. We may also use derivatives to hedge the currency and share price fluctuations of our underlying investments, where the gains and losses of the derivatives are matched against corresponding losses and gains in the underlying investments.