The most prominent SWF news over the past few days is China Investment Corporation’s release of its 2012 annual report, showing a strong 10.6% return. China’s Global Times offers some highlights from the report:
The company’s overseas investment portfolio realized an annualized rate of return of 10.6 percent in 2012, compared with a return of negative 4.3 percent in 2011. And its accumulative annualized rate of return has reached 5.02 percent since its establishment in 2007, according to the annual report posted on the company’s website on Friday.
“CIC’s increased profit is mainly attributed to a global recovery, especially in the US stock market, since the second half of 2012,” Li Daxiao, director of research at Yingda Securities, told the Global Times on Sunday.
As a former securities lawyer and now a professor teaching about corporate law and disclosure, I was most interested in whether CIC’s disclosure about their governance and investment policies had changed from 2011.
Well, in terms of the overall amount and structure of disclosure, things haven’t changed that much. As in 2011, CIC’s report includes discussions of CIC’s governance structure. As in 2011, the report describes CIC’s investment policies and provides examples of significant investments it has made (large stakes, passive investments). As in 2011, the report provides a description of the investment management process.
I would call most of their disclosure changes “tweaks”. For example, here’s a blackline (yes, I am a disclosure geek) showing the changes between the 2011 and 2012 investment policies section:
Investment Strategy and Portfolio Objectives
CIC is committed to being a prudent, professional and responsible institutional investor operating globally with
a good track record. Four basic principles underlie our investment philosophy and strategy:
• We invest on a commercial basis.
The underlying investment objective is to seek high, long-term and sustainable financial returns for our shareholder within acceptable tolerance for risk.
• We are a financial investor and do not seek
to control any sector or company.
• We are a responsible investor, abiding by
local laws and regulations in the countries we invest in and conscientiously assuming our corporate social responsibility.
Our investments are research -driven to ensure sound, prudent
decisions, and allocation-driven to guarantee a
. Our investment philosophy can be defined as follows: • We take a holistic view in strategy design, portfolio analysis and management
the integrity and consistency of our investment portfolio.
• As a long-term investor, we are well
volatility in markets, to pursue contrarian investments and to build long-term positions that can capture the premium for less liquidity.
enhance the transparency and liquidity of public market assets to preserve the liquidity and flexibility of our investment portfolio .
As always, there is plenty of interesting disclosure about how and where CIC is investing. Here, for instance, are asset allocations for 2011 and 2012:
Money out of cash and into equities, primarily. And where did CIC buy those equities?
Increasingly, from the U.S. Note also a shift from energy and materials into more financial sector investments.
As always, the CIC report provides fascinating reading for SWF watchers.