China's CIC overseas returns fall but fund still strong on US equities and external managers

China's sovereign wealth fund's 2020 returns may have declined, but the fund remains upbeat about US equities, external managers and the prospects for the Greater Bay Area
China's CIC overseas returns fall but fund still strong on US equities and external managers

China Investment Corporation (CIC) recorded a year-on-year 3.34 percentage point dip in returns from its overseas investments in 2020. However, the Chinese sovereign wealth fund still plans to forge ahead with a greater allocation to US equities as well as hire more external managers, build international partnerships and boost the Greater Bay Area.

CIC reported a net annual return of 14.07% from its overseas investments last year, putting its net annualised 10-year return on overseas investments at 6.82%, according to its annual report published August 27.

The return represented a 334-basis point decrease on its 2019 result of a 17.41% return on its overseas investments.

Ye Kangting,
Cerulli Associates

CIC's total assets expanded 16.8% to $1.2 trillion by the end of 2020. The company managed Rmb5.19 trillion ($801.05 billion) worth of state assets by  the end of 2020. 

"The return is relatively satisifying compared with some other SWFs globally. CIC did a good job with alternative assets and private market investing which provide attractive illiquidity premium and flexibility to its portfolio," Ye Kangting, senior analyst at Cerulli Associates, told AsianInvestor

The allocation for each asset class remained largely unchanged, however the fund set aside more for cash products (cash, overnight deposits, and US Treasury Bills) boosting the allocation from 1.2% in 2019 to 2% in 2020 from its global distribution (see chart below).

Founded in September 2007, CIC has three subsidiaries: CIC International; CIC Capital; and Central Huijin. Central Huijin makes equity investments in key state-owned financial institutions in China. The overseas investment and management activities of CIC are undertaken by CIC International and CIC Capital.


As the end of 2020

As the end of 2019

Overseas investments return



Annualised cumulative 10-year net return



Total assets

$1.2 trillion

$1.04 trillion

Assets under Central Huijin (onshore scale)

Rmb5.19 trillion

Rmb4.78 trillion

Global Investment Portfolio Distribution

Cash products



Fixed income



Public equity



Alternative assets



Distribution of the Global Investment Portfolio: Fixed Income

Structured products and others



Sovereign bonds of emerging economies



Corporate bonds



Sovereign bonds of advanced economies



Distribution of the Global Investment Portfolio: Public Equity (By Geography)

Emerging markets and others



Non-US developed markets






Source: AsianInvestor, CIC 2020 annual report and CIC 2019 annual report

“Asset allocation did not undergo any radical change over the year and remained relatively stable, although the reduced weight in stocks and bonds suggested a strategic pivot, particularly given the high returns in these asset classes reported by other sovereign wealth funds. 

"The change is in line with a shift seen over recent years in which CIC has reduced its public equity holdings from 45.9% in 2016 to 38.0% in 2020 while raising alternatives from 37.2% to 43.0%,” according to a Global SWF report published on August 30.


In terms of equity investment, the fund increased its position in information technology, consumer discretionary, and energy, and cut weight in real estate, financials and consumer staples.

In 2020, IT, consumer discretionary and financial were the top three components in its equity assets, representing 20.39%, 13.72% and 12.94% of the pie, respectively. The greatest changes was seen in IT allocation which stood at 17.9% in 2019.

At the same time, the fund plans to continue its push into US equities. As of 2020, US equities contributed 57% into its global equity portfolio, the figure in 2019 was 55.2%.

Michiel Plakman, Robeco

"Although US Equities in general are more expensive than emerging market equities, the free cash flow characteristics and return on invested capital are much higher in the US. We believe US equities will continue to trade at a premium to equities in the rest of the world this year," according to Michiel Plakman, head of global equity at Robeco.

“We think that healthcare, technology and financials are the most interesting sectors over the next 6-12 months in US equities. Healthcare, because it is still very cheap and there have been significant break-throughs in important markets, such as new drug developments for Alzheimer’s disease,” he added.

“We like technology structurally, and continue to see accelerating growth, especially for technology solutions that help sell products and services in a digital environment. Financials are interesting, as we do see a continued pick-up in inflation, which will put upward pressure on interest rates,” Plakman said.

CIC did not reply to emailed questions on its shifting in equity alloaction. 

Source: Global SWF


As of June last year, CIC’s total headcount stood at 689, including 204 in its global investments team. As of June, CIC’s international investment team accounted for 28.1% of the company’s total workforce although it did not disclose its latest headcount.

“There are signs that CIC is reducing its direct investment role in foreign investment. Its global investment team has declined to 28.1% of the organisation’s total workforce, down from 29.6% in 2019 and 75% in 2011,” the Global SWF report noted.

One reason for the decline could be attributed to the fund's increasing dependency on external managers, which now represent 56% of the global portfolio, compared with 52.2% in 2019.

"There are some employees leaving the firm as there was a salary cut under the pandemic like many other firms. But the impact is still limited, and external managers also providing strong investment support. External managers can also provide supplementary capabilities and enhance CIC’s diversification in asset allocations and investment methodologies," Ye said. 

In terms of domestic equity markets, as at the end of 2020, Central Huijin directly held equity interests in 17 financial institutions (including banks, securities companies, insurance companies, and others) throughout the country.


In its 2020 annual report, the fund also highlighted its future enhancement of Greater Bay Area investment (GBA, Guangdong-Hong Kong-Macao).

“In 2020, CIC took stock of priority industries, sectoral trends, and policy developments in the Greater Bay Area to identify investment opportunities in telecom, new energy, 5G and Internet applications, infrastructure, and other key sectors,” according to the report.

Meanwhile, there's no pause in its international partnerships.

Four new bilateral funds - the France-China Cooperation Fund, UK-China Cooperation Fund, Japan-China Industrial Cooperation Fund, and China-Italy Industrial Cooperation Fund - have been rolled out in succession and have made strong progress in closing deals in priority sectors in 2020.

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