The China Investment Corporation (CIC) deployed $58 billion of capital in 2009, following an initial $21 billion in 2008, according to its 2009 annual report. The return on its global portfolio last year was 11.7%, after suffering a -2.1% loss in 2008.
The report was released on Friday and marks a step towards transparency for the young, but very large, sovereign wealth fund. In return for opening up, CIC wants foreign governments to allow it access to their capital markets.
The annual report is full of statements about CIC's commercial mandate, corporate governance credentials and responsible behaviour. It also outlines its organisational structure - basic information that it refused to divulge not too long ago. CIC also says it has increased its communication with regulators and government officials in markets where it is investing.
(No mention of interacting with the press, however. CIC has yet to learn the art of the charm offensive, even to media that are sympathetic to its cause. Note to CEO Lou Jiwei: if you wish to get the hang of this, my email address is [email protected].)
Francois Guilloux, director at Shanghai-based consultancy Z-Ben Advisors, says the level of detail leaves much to be desired. Given CIC's size, it is understandable that it doesn't want to reveal too much about its portfolio strategy, but there's little to go on to understand anything more than a vague idea of how it is allocating assets.
Equities comprise the largest part of its global allocation as of end-2009, with 36%. Cash funds make up another 32%, fixed-income securities 26% and alternative investments 6%.
Not counting the cash funds, most of these allocations (77%) are in 'diversified holdings' while 23% are in direct, concentrated holdings.
Most of the portfolio is outsourced, with 59% going to external managers, and 41% run internally.
For equities, North America is the biggest recipient of capital (43.9%), followed by Asia-Pacific (28.4%) and Europe (20.5%). For bonds, the lion's share has gone to government bonds (44%), with exposures to government agency bonds (27%), corporate bonds (13%) and asset-backed securities and other structured products (8% each).
Total assets as of December 31 have risen to $332.4 billion, up from $297.5 billion at the close of 2008. On the liability side, the main chunk is owners' capital (the government seeded it with $200 billion) and capital reserves ($120 billion).
Last year CIC's total investment income was $44 billion and its net income was $41.7 billion.