Canada’s OMERS has warned that investors need to temper their expectations regarding the performance of more recent private equity vintages, as the favourable environment of high valuation multiples and low interest rates that spurred over a decade of superior returns in the asset class begins to fade.  

But the maths around another investor favourite, private credit, still “looks reasonable” despite tightening spreads, according to executive vice president and head of Asia Pacific for OMERS, Ashish Goyal.  

The comments offer a glimpse into how the C$138 billion ($100 billion) fund is thinking about the two private asset classes. OMERS has one of the highest unlisted market allocations among global pension funds at 69 per cent, with 19 per cent in private equity and 13 per cent in private credit. The remainder consists of infrastructure (22 per cent) and real estate (15 per cent) according to a 2025 mid-year disclosure.  

“I think certain [private equity] vintages, which were recently invested in the last four or five years, might really struggle to deliver the kind of returns they had promised,” Goyal said at an event in Singapore hosted by CGS International.  

Two decades ago, private equity investors focused on value creation in investee companies and reaped the rewards from it, but when interest rates plummeted post-GFC, the game changed, he said. 

“One [change] is valuations got lifted. So even if you added no value, you bought [a company] at maybe 10x [valuation multiples] at a time, sold it at 14x –  and you look very clever. But you have added no value. You turbocharge that when rates really dropped and increase your leverage levels as well,” he said. 

“Compounding that, there were certain vintages post GFC which made very high returns, not necessarily because value was added, but because multiples went up and there was a lot of leverage. That is now unwinding.” 

Private equity firms are under pressure to return investor capital amid a depressed deal-making environment, which inspired the rise of creative structures like continuation vehicles that allow managers to hold onto their assets longer and seek higher valuations. Goyal expects the challenging environment to remain a while longer.  

“I don’t think the marks are there… and the leverage is obviously unwinding because it’s not sustainable for many of the businesses to carry the books they were carrying when rates have gone up a lot,” he said.  

“[For more recent vintages] if they… buy well and are not pressurised into buying because they collected the [investors’] money, they have a chance of doing reasonably well, but you won’t see those kinds of very high returns you saw in particular vintages from 15 years ago.” 

In the six months ended June 30, private credit returned 2.7 per cent for OMERS while private equity had a 1.3 per cent loss, impacted by low valuations and, to some extent, fluctuations in the US dollar.  

In private credit, it is “certainly a riskier asset than it used to be” as covenants become diluted and leverage multiples shot up, Goyal said, but added that there are still positive features such as its floating-rate nature, which means investors are taking credit risk more than rate risk.  

“When we do it [private credit], the main thing we watch out for is… we want the covenants to be very tight. Return of capital is very important to us – return on capital we’ll worry about later, we want our money back to begin with.” 

Deep markets 

Weighing in on public markets and the question of geographical diversification, Ashish noted that there are five “deep markets” across the world where an investor of its scale can meaningfully allocate to: US, India, China, Europe and Japan (though to a lesser extent). 

Within its investments, OMERS’s largest underlying exposure is to the US (55 per cent), followed by Europe (18 per cent), Canada (16 per cent) and Asia Pacific plus the rest of the world (11 per cent). 

In China, Goyal predicted the difficult journey of rebalancing its economic drivers from capital expenditure to consumption will remain for a while longer, and the country needs to fundamentally address the issue of overcapacity.   

“You’ve seen two, three years of a deflationary environment in China. [If it] continues for some more time, it might become very much like Japan, where it’s so deep seated that you can’t shake the consumer out of that mindset,” he said. 

“I’m not seeing enough by the leadership to change that direction, which makes China a cyclical buy. 

“You can trade China. You can invest in it. It’s already done very well over the last 12 months from a very low level. But can it be a structural buy? Can it stand next to India and the US as something that you want to own for the next 10 years? I’m not so sure.” 

Japan may present interesting opportunities as a result of recent corporate governance reforms, including improvements like the reduction in cross-shareholdings. “This could be a multi-year shift – a positive shift – and that might create genuine value in Japan,” Goyal said.  

Other markets in the region, though, might not be so easy for OMERS to tap in. Taiwan and Korea have narrower markets – semiconductor manufacturer TSMC accounts for 55.1 per cent of the MSCI Taiwan Index, while the Korean market is driven by top exporters like Samsung and SK Hynix.  

The ASEAN equity market lacks scale. The collective market capitalisation of the Southeastern Asian listed companies reached $3 trillion as at December 2024, according to data from ASEAN Exchanges, which is less than Nvidia’s value by itself ($4.4 trillion).  

“Europe, in its own kind of commingled way, has something ASEAN doesn’t. ASEAN is very, very small, and for investors like us, where our minimum equity requirements are quite high, it’s very difficult to invest in,” he said. 

Because resilience may not be obvious without a whole-system view, people often sacrifice resilience for stability, or for productivity, or for some other more immediately recognisable system property.

– Donella H. Meadows

The increasing complexity of our global socioeconomic apparatus inhibits our ability to shape and change it the way we desire. Amid the slow, unfolding ecological crisis we face, this insight supports the notion of an impenetrable and uncontrollable (human-built) superstructure holding us back from a much-needed shift towards sustainability and resilience.

The concept of a superstructure may seem obscure, but it is the natural result of a prolonged period of growth, in which complexity is added onto complexity. This was sparked by the development of rational thinking and science, in the post-Enlightenment era, as a means of controlling nature.

The first industrial revolution (steam power), followed by Taylorism (scientific management of workflows) and the second industrial revolution (electric power), consolidated this process via standardisation, normative behaviours and optimisation. These technical revolutions materialised and engineered this newfound human power over nature.

Essentially, the human sphere, alongside its appendage, the technosphere, has significantly outgrown the rest of the biosphere. The extractive power exerted on the latter has been instrumental in the construction of the superstructure. Planet Earth itself became the object of our optimisation. Scholars named all this the Great Acceleration or the Anthropocene.

Among the most impactful, albeit often invisible, repercussions from this unchecked human activity is a twofold distortion of our presence on this planet:

  • “The incapacity of our imagination to grasp the enormity of what we can produce and set in motion.” (The Obsolescence of Man, Volume II, Anders, Günther)
  • Our relentless emancipation from nature to the extent of feeling and acting as separate from it.

We have come to perceive ourselves as “exempt from ecological processes” – this is what ecologists refer to as the “othering of nature”.

Is it really worth it, then?

If the narrative so far has not yet sufficiently teased out the sustainability implications, I hope the remainder of this piece will inspire more practical reflections on the matter.

Due to their inner interconnectedness and nonlinearity, complex adaptive systems (CAS) such as ours may exhibit signs of counter-intuitiveness and paradox. The system we have built and populate today is no exception. In the context of increasing efficiency and simultaneous efforts towards sustainability, the mother of all paradoxes is the Jevons paradox.

Does (energy) efficiency actually lead to (energy) saving? It should – but, paradoxically, that is not the case. Improved efficiency in resource use tends to increase overall consumption and demand for that resource (because it lowers the price), rather than a reduction (because we need less of it now).

For practical purposes, I will illustrate this paradox through a number of real-world historical examples where increases in efficiency led to unintended, opposite effects.

  • The Green Revolution of the 1940s-80s doubled the efficiency of food production per hectare in developing countries by maximising yields through intensifying production. This eventually increased the number of mouths to feed, worsening food shortage and replaced more nutrient-rich cereals eroding the quality.
  • Building more or bigger roads encouraged greater use of vehicles, worsening traffic jams.
  • Rising oil prices in the 1970s spurred the production of more fuel-efficient cars, leading American car owners to increase their leisure driving, number of miles driven, and preference for heavier vehicles.
  • LED bulbs have significantly reduced the amount of electricity needed per light, but they led to increased use of electricity because everything is now lit.
  • Refrigerators have become more efficient but also grown in size.
  • Water-efficient appliances and advancements in irrigation techniques have reduced per-unit consumption of water, but the overall usage has increased due to expanded agricultural activities.
  • The enhanced ease of creating, sharing and printing with paper-displacement technologies led to a rise in paper consumption.
  • Enhanced health prevention brought economic efficiency in the form of saved money, but increased healthcare costs in the long run due to the increased lifespan of the population.

So what?

The problem here is not efficiency per se, but a lack of restraint. Efficiency remains the most powerful driver for improving individual and local material benefits.

For instance, increasing the number of car lanes does indeed provide relief in the short-term. However, in the long-term, it reliably leads to more traffic, worsening pollution and causing spillover effects to nearby areas and communities.

I will leave it to you to iterate on this exercise with the other examples mentioned above and many others in history, especially those yet to come (think AI, electric vehicles…).

The problem is that with complex systems, things operate across multiple scales and dimensions – time, space (local vs. global), nested hierarchical levels. Efficiency usually brings material benefits in the short-term and at the micro level, but it can be harmful in the long-term and at the macro level (collective, wider system).

Sustainability is, by definition, a long-term macro target. And increased efficiency is often considered a milestone to greater sustainability. Yet, efficiency may actually be detrimental to sustainability. As seen, it has often proved to be so in the past. We are closing the circle here – the increasingly efficient supermachine we set in motion is eroding its own safe operating space.

In more abstract terms, in complex adaptive systems, efficiency triggers emergence – doing things better frees up resources for doing different things. The system learns how to optimise resources, generates surplus, and adapts by expanding socioeconomic activities.

This very expansion is responsible for increasing stress on the environment, undermining stability and increasing fragility (eg above all breaching planetary boundaries).

This is the process fuelling the superstructure.

The way out of the trap? Or the way to resilience

We need to balance the trade-offs between short and long-term and between the individual and the whole system – it’s a matter of adaptability in the present to generate sustainability and resilience in the long term.

Our current system is trapped in a trajectory that could lead to further Jevons paradox-like phenomena. Adaptation means increasing the chances of avoiding those outcomes.

Perhaps too simplistically, we have two ways forward:

  1. Correct for the Jevons paradox after the event by preventing the surplus from increased efficiency circling back into the system (eg via taxation proportional to the savings) – a form of imposed inefficiency (restraint).
  2. Prevent the Jevons paradox before the event by limiting production (eg prohibiting oil and mineral development, or the cutting of timber on certain lands).

The two points above may be interpreted as more sustainable impositions of ‘human boundaries’. However, history suggests we are not particularly good at self-imposing limits, so if that trend persists, we may need to learn to become increasingly adaptable.

Andrea Caloisi is a researcher at the Thinking Ahead Institute at WTW, a network of asset owners and asset managers committed to mobilising capital for a sustainable future.

Pensioenfonds Zorg en Welzijn (PFZW) the €250 billion Dutch healthcare fund, has just published the 800 names that have made it into its reduced equity portfolio. The final list, steadily cut over recent years from a high of 3,500, enables the investor to better lean into its celebrated reputation in sustainable investment which is integrated not just in equities, but across the entire portfolio.

“Reducing the portfolio is the best way to really understand what companies are doing and know what we own,” Professor Dirk Schoenmaker, chair of the investment committee, said in an interview with Top1000funds.com.

BlackRock and Legal & General Investment Management, which managed multi-billion dollar mandates, have lost mandates alongside AQR Capital Management. And Robeco, Man Numeric, Acadian, UBS, Schroders, M&G and Lazard will now manage PFZW’s equity portfolio, alongside the internal team at its asset manager PGGM. 

Schoenmaker, who teaches banking and finance at Erasmus University, is a research fellow at the Centre for European Policy Research and used to work at the Dutch Ministry of Finance and the Bank of England. His experience and expertise was sought by PFZW to help shape its key strategic goals and investment policy which is implemented by its asset manager PGGM.

As part of a multi-year journey, PGGM has changed its investment approach to focus on risk, return and impact. In April, chief fiduciary officer of PGGM, Arjen Pasma, flagged to Top1000funds.com that there would be a change to the manager roster in public equities this year, and other asset classes would be impacted as it rolls out its impact journey to 2030.

Among those strategic goals sits PFZW’s ambition to apply fundamental research to each individual company in the portfolio, digging into financials, strategy, risk and industry trends to go much further than “one or two ESG metrics” to reveal the sustainability of corporate business models.

Rather than being “unpleasantly surprised” by incidents at companies because they were part of an index of thousands, the benchmark is consciously built based on balanced return, risk, and sustainability.

This will also allow PFZW to put more to work in impact where it currently invests around €50 billion in transition themes like climate, healthcare, biodiversity and the circular economy.

It’s an approach that Schoenmaker compares to Warren Buffett’s fundamental approach. “Fundamental investors like Warren Buffet don’t invest if they don’t understand the business model, and at PFZW we can now also really get to know the company and make a conscious decision whether we want to invest or not.”

It also has echoes of another Buffett missive: skilled investors should build concentrated portfolios because, in Buffett’s words, over diversification “makes little sense if you know what you’re doing” and when it comes to sustainability, PFZW and PGGM are global leaders in the field.

The reduced equity portfolio has a 1.5 per cent tracking error and Schoenmaker says it is designed to deliver a return closely aligned with the broader market. “We are not trying to beat our benchmark,” he says. “Impact investment has a neutral effect on ten-year returns. We are not promising higher returns but want to protect the purchasing power of pensions. Impact is about long-term value creation.”

With that said, in real estate he notices that a positive feedback loop has started to emerge.

“Energy-efficient residential and commercial buildings have increased rental and property values. We are starting to get to the exciting bit,” he says. It means that when the PGGM team spots poor energy efficiency in real estate holdings they will invest to improve that part of portfolio in keeping with value investment.

He believes the same thing will happen in infrastructure whereby “making the right decisions around water, electricity and transport” will secure long-term value. “The infrastructure we build today locks in the energy mix for the next twenty years,” he says.

Portfolio construction

One segment of the 800 equity names comprises “sustainability neutral” companies that don’t have a big impact either way, he continues. These companies ensure the portfolio is diversified and balanced across different sectors and strategies, and that the fund doesn’t miss out on market trends – PFZW still has exposure to mega-cap tech stocks that have dominated the US equity market, but the allocation is “a bit smaller.”

Portfolio construction also involves divestment based on PFZW’s exclusion preferences drawn from its 3 million plan beneficiaries over the years.

Tobacco was excluded years ago, but in June last year PFZW sold approximately €600 million in gambling stocks following a member survey indicating concerns. The pension fund has also completed divestment from a total of 310 oil and gas firms because they lacked credible climate strategies. It has sold stakes worth a combined €2.8 billion, retaining only seven frontrunners committed to transitioning to low-carbon energy.

Schoenmaker says the decision was a consequence of “years of collecting information” and engagement with fossil fuel groups to produce verifiable transition plans to limit temperature rises, that ultimately came to nothing.

“It was very disappointing because we walked away from a large group of companies, although if they reform we will be back in. Engagement doesn’t work unless you divest,” he says.

Despite the failure of engagement with fossil fuel groups, he believes that corporates welcome PFZW’s engagement. Mostly because the positive effect of engagement soon appears in their bottom line.

“We try to be an informed investor and always listen before we start asking the questions. Engagement makes us an interesting partner for companies. We see things happening they might have missed, and we can give advice.”

Like his believe that corporate stories become much more compelling when the annual report begins by outlining what a company does, or is trying to achieve, than stats on the share price or dividends.

Still, engagement with private equity GPs to integrate impact, an important component of PFZW’s balanced portfolio and which accounts for around €23 billion, has been slow. “Only some [GPs] have started to move, and most of those are in Europe,” he reflects.

But he notices more pension funds are putting pressure on GPs to do more to integrate impact, and the co-investment pipeline is growing.

“We are actively discussing impact with our GPs but it is a long-term process that requires patience. If we can achieve change regarding impact in private equity, we will have achieved a lot.”

Navigating anti-ESG sentiment

Part of Schoenmaker’s job is to ensure PFZW reflects plan beneficiaries in its investment strategy. It’s an engagement process that reveals the investor practices what it preaches.

PFZW keeps abreast of beneficiary sentiment by regularly surveying participants and the board reports quarterly to an accountability body peopled by employers and retirees. He says participants continue to “applaud” a strategy that combines sustainability with returns despite the Netherlands also experiencing a backlash in ESG sentiment.

He is confident members “truly understand” how impact aligns with long-term value creation. But he also believes anti-ESG sentiment is best viewed through the lens of any other business cycle.

“It is true that people are pessimistic about sustainability and companies and governments have taken back commitments. There was a lot of interest in sustainability, and now that has partly fallen away, but this is the business cycle of sustainability, and we look through it for the long haul.”

Schoenmaker, who returns to his students this week after the summer break, concludes: “I always tell my students it’s not a question of making finance sustainable, it’s about using finance to help solve problems. Finance is not the culprit – it is the means to achieve returns and help create a liveable planet and transition to a new world that will happen in their lifetime.”

After hiring former CalPERS’ investment chief Ben Meng six months ago, Canadian pension giant CPP Investments has added another seasoned pension executive Kevin Bong to its investment team, in a sign that the C$732 billion ($530 billion) behemoth is staffing up to focus on alpha and enhance the total portfolio approach. 

Bong, who previously oversaw AIMCo’s Singapore branch before the Alberta fund shut its local operations, relocated back to Toronto for the managing director and head of portfolio design and construction role at CPP Investments, which began this week. The position sits within the total fund management department and reports to senior managing director and department head Manroop Jhooty.  

CPP has been on a journey to evolve its well-known total portfolio approach. Part of Bong’s role will be researching and testing “emerging factors” that can be incorporated into the fund’s total portfolio approach, alongside traditional macro factors like inflation and growth that can influence risk and returns.  

Geopolitics and climate change are two “emerging factor” examples, with the fund using scenario-based testing to inform adjustments to the portfolio on a tactical – or even strategic – basis, Jhooty said in an interview with Top1000funds.com last year.  

Bong will also take charge of designing short and long-term portfolio targets, systemic risk factor modelling and sustainable investment integration, according to his LinkedIn.  

Prior to AIMCo, where he was chief investment strategist responsible for setting the fund’s overall investment strategy in addition to being Singapore’s local head, Bong spent more than a decade in two separate stretches at GIC where his final role was director at the economics and investment strategy department.  

Total portfolio management and active management will work in tandem to carry CPP over the C$1 trillion mark in 2031 and C$3 trillion by 2050. In an interview with Canadian press in 2023, chief executive John Graham flagged the beginning of “a decade of alpha” – a period when investors will be rewarded for picking the right countries, asset classes and stocks as the investing environment becomes more volatile.  

As CPP looks to capitalise on market inefficiencies, it selected Meng – who is an industry veteran that led some of the world’s biggest and most complex asset owners – to head up the efforts. Before his stint at CalPERS, he was the deputy CIO at China’s massive foreign reserve investor, State Administration of Foreign Exchange (SAFE).  

Meng joined CPP as managing director and head of investment portfolio management this March, looking after strategies in the fund’s active portfolio which accounts for over half of its assets under management.  

It mainly consists of capital markets and factor investing, active equities, credit, private equity, and real assets departments, and some cross-strategy investments that sit under total fund management. It has delivered a 12 per cent net return over the past five years, including performance of absolute return strategies.   

The fund has been finetuning aspects of its thesis on active investment, including cutting back on emerging markets exposures due to improving market efficiency and a narrowing window of opportunities to generate alpha.  

On the way to C$1 trillion, CPP said its focus on active management will be on “orchestrating active capabilities in the most effective ways” and breaking down investment silos, as well as building a one fund culture where ” people’s identity in this organisation is CPP” rather than individual investment teams.  

CPP Investments’ 10-year annualised net return stands at 8.4 per cent.  

The Alameda County Employees’ Retirement Association (ACERA) is preparing a significant overhaul of its $6.6 billion public equity portfolio, shifting towards a more global and actively managed strategy.

The potential restructure would require up to four manager terminations and up to three global equity searches (core, growth, and value styles with 20 per cent allocated to each).

“We’re not getting a lot of bang for our buck – our tracking error is below 1 per cent,” investment officer Stephen Quirk said at an investment committee meeting in July.

The $13.2 billion fund, which provides retirement benefits for public employees in Alameda County, California, has run a largely passive approach since 2018. About 80 per cent of the US equity portfolio is indexed by BlackRock. But in 2024, the US equity portfolio underperformed the Russell 3000 benchmark (22.8 per cent versus 23.8 per cent) thanks to some active, large cap managers underperforming.

The fund’s analysis, in conjunction with investment consultant NEPC, found that many of its current managers have not produced significant positive net excess composite returns since inception, with excess returns ranging from zero to 3.2 per cent. It found only one if its current six managers were high conviction.

The review led to the fund adopting the MSCI ACWI IMI global equity benchmark as its main benchmark, replacing the Russell 3000 for US equities and the MSCI ACWI ex-US IMI benchmark.

“When you implement a global benchmark that’s acknowledging [that] strategically you’re going to recognise the entire [set of global investment] opportunities – that you’re not trying to tilt one way or the other,” Quirk said.

“Then, the benefit of hiring a global manager is you’re outsourcing that decision to them, saying, ‘Hey, we’re not smart enough. We’re paying you active fees. If you guys have a view, you can implement that’.”

The shift recognises the increased globalisation of the economy, markets, and companies, which creates new excess return opportunities for skilled active global managers, according to the fund.

While the new strategy was not made in response to the market turmoil unleashed in April by President Trump’s Liberation Day tariffs, the move aligns with the more bifurcated world that investors are now grappling with.

Active management versus passive

There has been a longstanding trend across the industry towards passive strategies, with institutional investors swayed by lower costs and the difficulty active managers have had in consistently beating benchmarks.

However, ACERA’s research showed a greater dispersion and outperformance in the global equity manager universe than in the US and international large cap equity manager universe, implying an environment more suited to successful active management.

Quirk said its preferred active equity strategy would double tracking error to around 2 per cent, but this would require mitigating underperformance risk by picking the right managers and building a diversified equity portfolio.

“All these analyses shows excess return,” he said of the three different models the fund assessed. “The reality is, when you take on risk, you can underperform by a lot as well.”

ACERA’s preferred option (the only option to take tracking error to around the 2 per cent level) involves lowering the current passive allocation from 64 per cent to 20 per cent. A back test showed it would have delivered a 10 per cent annualised return over the decade ended March 31, 2025 compared to its current equity portfolio return of 8.6 per cent.

The equity portfolio represents a substantial shift, although the fund has yet to finalise the decision.

“I understand the transition might be complicated, but the goal is the end product is simpler, higher conviction, and ultimately greater excess returns,” Quirk said. “That’s the number one goal we’re trying to achieve.”

ACERA’s 50.2 per cent portfolio allocation to global equities is slightly overweight compared to its long-term policy target of 48 per cent. It also has an overweight to absolute return strategies (7.9 per cent versus a target of 6 per cent) and an underweight to private credit (4.3 per cent versus 6.8 per cent).

At its most recent August board meeting, the investment team discussed plans to bring its entire portfolio more closer to those targets by redeeming about $174 million from its most liquid absolute return strategies and reallocating it to Loomis Sayles’ fixed income strategy, which it views as having the most similar risk-return characteristics as ACERA’s private credit program.

Singapore’s Temasek has unveiled its biggest organisational overhaul in more than a decade, splitting its investment portfolio into three entities to “sharpen” investment focus, boost accountability and align performance metrics. 

From April 2026, the S$434 billion ($324 billion) sovereign wealth fund will manage its investments via Temasek Global Investments, Temasek Singapore and Temasek Partnership Solutions, respectively looking after the three portfolio segments: global direct investments (40 per cent of the fund), Singapore-based portfolio companies (40 per cent), and partnerships, funds, and asset management companies (20 per cent).  

Temasek Holdings CEO Dilhan Pillay said the three investment segments have distinct attributes and “there are good reasons” behind the separation.  

“[Since our last restructure 11 years ago] we developed so many other capabilities to support our portfolio strategies, our investment strategies, and that’s really what we’ve been investing in – capabilities for the world that was changing, and the world that will continue to change,” Pillay told reporters last Friday. 

“In that period of change, we too need to change.” 

Temasek’s portfolio composition as at March 31. 2025. Source: Temasek

The nature of investments is the most notable difference: Temasek is typically a minority investor in its global direct investments segment and often leans into the expertise of like-minded partners, but it is a control investor in Singaporean companies and is looking to be more active in board nominations moving forward.

Performance metrics used to evaluate these investments also diverge. Financial return is the performance that matters the most in the global direct investments segment as Temasek is a shorter-term owner of these businesses, but for Singaporean companies the success is also hinged upon portfolio companies’ operating metrics including business transformation, capital structure optimisation and even talent development, Pillay said.  

In turn, different kinds of capabilities are desired in the three segments. It is crucial for the global direct investment team – consisting of 290 professionals – to source and execute the right deals and maintain sector expertise, while the Singaporean investment team needs to have knowledge around company restructuring and capital management.  

In a media release, the fund said the new structure would allow it to “support portfolio strategies for growth and returns, and perform with greater accountability and alignment”.  

Alongside Temasek International, which holds the group’s corporate functions, the four subsidiaries will sit under Temasek Holdings – a Singapore government-linked entity whose financials are subjected to certain audit and accountability requirements, known as the Fifth Schedule entity. All four subsidiaries are chaired by Pillay.  

The overhaul is a part of Temasek’s 10-year strategy, known as T2030, and offered a glimpse into the fund’s forward-looking investment philosophy. To weatherproof its portfolio, the fund is targeting a 60/40 split between the “resilient” and “dynamic” portfolio components.  

The resilient component will deliver a stable, narrower range of outcomes over time and include core Singaporean and global portfolio companies, “compounders” with long-term potential, partnership funds and asset management companies, private credit and core plus infrastructure. It has a 5 per cent target allocation to private credit compared to 2 per cent currently.  

The dynamic component will be companies with high growth prospects, including growth equity, public markets and liquid strategies, and opportunities identified by its innovation and emerging technologies team dedicated to scoping out future-facing solutions.  

Pillay said Temasek has been enhancing its capabilities in public markets during the last 18 months, which is crucial for liquidity and the fund’s triple-A credit ratings, and has already seen an “uplift in the performance”.  

Elsewhere in the portfolio, Temasek is holding a strategic review on how to better synergise between the dozen asset management companies it controls. The main asset management platform for Temasek is Seviora Holdings which has four subsidiaries, including Azalea which securitises its LP interest in private equity funds. Other companies include Aranda, a private credit offshoot carved out of Temasek’s in-house credit team which now manages a S$10 billion portfolio of its funds and direct investments.   

Temasek Global Investments will be led by Chia Song Hwee, who also becomes co-CEO of Temasek International this October. Temasek Singapore will be headed by chief financial officer Png Chin Yee. Rohit Sipahimalani remains chief investment officer of the group.  

Temasek invested S$52 billion and divested S$42 billion in the year to March 2025. The 10-year and 20-year total shareholder return – a compounded and annualised figure which includes dividends paid by Temasek and excludes investments from shareholders – is 5 and 7 per cent respectively in Singapore dollars.