This committee oversees the allocation of the "entire overseas portfolio, and better ensure that asset allocation objectives are being implemented across our portfolio and driving investments in line with our strategy", CIC said in its annual report.
However, the formation of the team may have led to some internal dissatisfaction, as evidenced by a string of departures from its investment team after the set-up of the team. Between April and June, CIC saw the departures of Wallace Yu, head of multi-asset, Susan Gao who was in charge of global fundamental equities managing more than $10 billion, and Meng Chen, a team leader at CIC direct investment arm.
The committee is led by CIC chairman Peng Chun and involves all senior staff in the institution. It's repsonsible for making the fund's most important investment decisions, the unnamed executive said. The job duties of the three departed staff are now shared among other members in the relevant team, they added.
Part of this is likely to include the development of more inhouse investment capabilities. CIC has already increased inhouse investments to the point that externally-managed assets in its global investment portfolio fell to 52.2% in 2019, down from 62.6% two years before.
CIC wants to develop these in-house capabilities further, the executive noted, adding that sizeable external mandates command a management fee that is much higher than the cost required to employ internal staff to do the same job.
CIC was established in 2007 to diversify China’s foreign exchange holdings. Its three subsidiaries are CIC International, CIC Capital and Central Huijin. The former two conduct all overseas investments, including into alternatives, while Central Huijin undertakes equity investments in key domestic state-owned financial institutions.
At the end of 2019 CIC had total assets of $1.045 trillion and net assets of $946.9 billion, of which the aggregate state-owned financial capital managed by Central Huijin stood at Rmb 4.78 trillion ($700.39 billion). This means CIC had $345.31 billion in its global portfolio.
Facing Covid-19 and ongoing geopolitical tensions, CIC will be more prudent in its investment and employ more hedging tools across assets, particularly in stock markets, the unnamed executive said. The sovereign wealth fund had 55.2% of its public equity in the overseas portfolio invested into the US.