Clarity of mission and decision-making, domestic and regional leadership and a long-term vision are what connects the winners of AsianInvestor’s second annual Institutional Excellence Awards.
The winners were announced on October 30 and will receive their awards at an exclusive ceremony and dinner in Singapore this evening at The South Beach hotel.
Introduced to highlight best practice, 17 awards were handed to 16 institutions collectively managing $3.5 trillion, with the Monetary Authority of Singapore the only entity to be recognised in two categories. This year we added categories for responsible investing and contribution to capital market development.
Our winners have been able to strike the right balance between internal expertise and external engagement, while faced with the challenge of a low-interest-rate environment. They provide the role models for regional peers to follow.
AsianInvestor set out to identify the progress of each institution as an investing entity. We designed a questionnaire around qualitative factors to ensure a uniform approach, comparing robustness of process, diversity of asset allocation and adherence to investment guidelines.
Institutions were encouraged to self-nominate and we welcomed nominations from third parties. Our editorial team also short-listed asset owners at its own discretion. We thank all those who contributed their thoughts to these awards. The full list of write-ups appears in the December issue of AsianInvestor magazine.
Monetary Authority of Singapore
Clarity of mission is what helps to mark out the Monetary Authority of Singapore (MAS) as Asia’s most prudent manager of foreign exchange reserves.
With S$341 billion ($241 billion) in FX reserves on its balance sheet, MAS is not seeking to be an innovator; that is not part of this mandate. It leaves that to the private sector. Rather, it strives to be an effective and thoughtful manager, investing conservatively in a well-diversified portfolio of cash, bonds and equities across developed and developing markets.
The institution's largest allocation is to investment-grade bonds in advanced economies. While three-quarters of its reserves are denominated in G4 currencies, no single currency allocation makes up more than a third of the composition.
MAS has been able to strike the right balance between internal expertise and external engagement. It empowers its own staff to make decisions and think as investors both strategically and tactically, while remaining well connected to external asset managers. It outsources alternative investment allocations to Singapore’s GIC. It knows which managers it likes and is able to focus on their capabilities and how they can add value. In AsianInvestor’s view that is best practice.
Further, MAS carries out regular adequacy assessments of its reserves, including a comprehensive review of the risks it is exposed to. The stability it has achieved is testament to its effective management of reserves, particularly when you consider the uncertain and uneven global economic backdrop over the period.
MAS’s investment gains have ranged from S$12.8 billion in fiscal 2011 to $10.4 billion in fiscal 2015, within a narrow band. That level of consistency is hard to find, and is evidence that its system is functioning efficiently and that it is making prudent investment decisions.
For sound management and the ability to operate with clarity of mission, we recognise MAS for institutional excellence as an exceptional steward of foreign reserves.