Investment Portfolio

CIC has always attached great importance to constructing a simple, transparent, and resilient portfolio and undertaken continuous efforts to optimize asset allocation and portfolio management. In 2015, building on past practice and drawing upon the experience of peer institutions, CIC International introduced the Reference Portfolio into its allocation model. Its allocation framework shifted from focusing on "strategic allocation, policy portfolio, tactical allocation, and actual allocation" to focusing on "reference portfolio, three-year policy portfolio, annual policy portfolio, and actual portfolio", providing clearer guidance for portfolio construction. The Reference Portfolio serves as an anchor for determining the risk neutral attributes of the portfolio and provides a benchmark for measuring long-term relative performance. The three-year policy portfolio is the actual neutral portfolio and spells out the asset substitution relationship and the direction of portfolio construction. The annual policy portfolio is the execution plan that defines the proper range of deviation and sets portfolio construction targets based on deviations driven by market sentiments and on the progress of alternative asset investments. Furthermore, CIC International rebalanced the portfolio to manage the actual policy portfolio deviation triggered by market fluctuations and maintained the discipline of contrarian investing and the risk-return profile of the overall portfolio. Following the adjustment to the allocation model, CIC International improved its portfolio rebalancing mechanism to ensure the smooth functioning of the new allocation framework.

CIC invests in a wide range of financial products globally, including public equity, fixed income, alternative assets and cash and others. Public equity refers to equity investment in listed companies. Fixed income refers to bonds, including sovereign, corporate, and agency bonds. Alternative assets include hedge funds, multi-asset investments, industry-wide direct investments, industry-wide private equity, resources/commodities, real estate and infrastructure. Cash and others includes cash, overnight deposits, and US Treasury bills.

In 2011, the Board of Directors extended our investment horizon to 10 years and adopted rolling annualized return as a significant benchmark to evaluate our performance.

  • Global Investment Portfolio Distribution

    As of 31 December 2016

    Internally Managed Assets versus Externally Managed Assets 

    As of 31 December 2016

 

Against the backdrop of complex and fluid situations at home and abroad, CIC managed its investments actively and prudently, and was able to achieve satisfactory results.

  • CIC International Public Market Investment

    In 2016, CIC continued to refine its management of public market investments, optimize its organization structure of strategies and improve its capacity to generate excess returns.

    Public market equities. We strengthened research on macroeconomic conditions and changes in market dynamics, improved the adaptability of the investment strategy to the evolving market environment and actively controlled downside risks. We also adjusted and optimized the strategy structure, formulated thematic global equity strategies and expanded the sources of excess returns. Various instruments were used to analyze the profiles of external managers and to assess external managers and adjust as necessary.

    Bonds and absolute returns. We reviewed and optimized the portfolio composition, developed optimization plans for various strategies and sub-strategies, and intensified post-investment monitoring and management. Quarterly reviews examined managers' positions, performance attributes and market opinions. The dynamic global bond allocation strategy was added during the year, with a dynamic emerging market bond sub-strategy. For hedge funds, we continued to optimize the sub-strategy structure and allocation proportion, and actively sought Alpha sources to increase returns. Multi-asset strategy saw greater optimization of managers for risk-parity, and reduced the concentration of managers.

    Internal management capabilities. We took steps to develop in-house investments, carefully constituting the global select internally managed portfolio, constantly improving the internal investment procedures, and strengthening capabilities for researching of fundamentals to increase efficiency in investment analysis. We developed two internally managed quantitative portfolios — based on Sharpe Ratio optimization and Information Ratio optimization — and we continued to study and implement new quantitative investment strategies. Our internally managed investment capabilities better complemented and supported the externally managed investment capabilities. Several internally managed portfolios had significantly out-performed the benchmarks since inception.

  • Fixed Income in Global Portfolio

    As of 31 December 2016

    Public Equity in Global Portfolio by Region

    As of 31 December 2016

    Public Equity in Global Portfolio by Sector

    As of 31 December 2016

    CIC International Long-term Investment

    In 2016, We strengthened long-term asset allocation strategies to improve the effectiveness of long-term investments. Standardizing investment decision-making and project monitoring procedures helped improve long-term asset management. In 2016, we signed or approved 48 contracts for investment in private equity, real estate, and private credit. We partially or fully exited several direct investments with satisfactory results.

    Private equity. We improved internal investment decision-making, hired new top-tier managers and renewed our commitment to high-performing managers in order to optimize the industry-wide portfolio. We also increased investment commitments to managers with a strong track record to deepen long-term cooperation, and we collaborated with managers to increase the proportion of co-investments and co-sponsorship.

    Real estate. We created a multi-tiered structure of managers, continued to optimize external management and revamped the co-investment model. Believing in investing in the best, we invested in several high-quality and resilient core assets in major real estate markets in the world that could generate stable long-term returns.

    Post-investment management. We clearly defined responsibilities, and further standardized post-investment processes. We introduced strict controls to guard against operational risks, fostering awareness of compliance. To mitigate risks, we monitored investment portfolios, closely tracked major events, and put precautionary measures in place. Ever alert to potential opportunities in the market, we reduced or exited certain investments as appropriate.

  • Investment Management Activities of CIC Capital

    In 2016, CIC Capital pressed ahead with its top-down strategic design, and formulated the Outline of CIC Capital's Business Development Plan (2017-2026). It optimized the organization of its investment departments, adopted innovative approaches to revamp its incentive scheme, and improved the efficiency of its human resource management. By considering the characteristics of direct investment projects, it also explored new ways to improve its investment decision-making for speedy and effective investment decisions. Rules and policies for operational support, legal compliance and risk management were revised and upgraded.

    CIC Capital established long-term strategic collaborations with international institutions and conducted joint projects with several Chinese companies. In 2016, CIC Capital made decisions to invest in 16 projects, with a total commitment of about $5 billion.

    Also in 2016, CIC Capital increased investments in infrastructure, particularly high-quality core infrastructure assets. It collaborated with peer institutions, asset managers, sector investors and other like-minded partners, and carried out landmark projects in ports, railway, pipeline and telecommunications in Europe, Oceania and Latin America. These projects included UK National Grid's gas distribution network, Nova Transportadora do Sudeste S.A. (NTS, a system of natural gas transmission assets in the southeast of Brazil), Port of Melbourne in Australia, and the Australian rail and port operator Asciano. CIC Capital also sought market opportunities and invested in internet, financials, services and other industries. It adopted a value investing strategy, and closely followed the energy and other resource sectors actively to find investment opportunities.

    For existing investments, CIC Capital reviewed its investment projects extensively and, based on the market environment and project conditions, tailored a post-investment management plan for each project. It also tightened communication with portfolio companies and other shareholders to add management value. And it tracked some of its high-quality assets and explored opportunities for increasing investments or for cashing out and exiting at the right time to harvest returns.

  • Overseas Offices Activities

    CIC International (Hong Kong) and CIC Representative Office in New York engage in frequent communications with governments and businesses of recipient countries, peer institutional investors and investee companies and funds, to expand channels and platforms for overseas investments and jointly explore excellent investment opportunities.

  • In 2016, CIC International (Hong Kong) adhered to CIC's existing investment and research discipline in actively and prudently managing four portfolios: the entrusted global investment-grade corporate bond strategy portfolio, China-Hong Kong equity strategy portfolio, the sub-strategy portfolio focusing on special credit opportunities among Chinese enterprises and the US high-yield bond portfolio. The total assets under management by CIC International (Hong Kong) stood at around $12 billion, and had been well performing. CIC International (Hong Kong) also leveraged its geographical advantage to conduct active exchanges and interactions with peer institutions and to closely monitor regional and global market dynamics. This provided strong support for our investment research, networking, and post-investment management.
  • Out of its needs for international exchange and business expansion, CIC hosted the opening ceremony and investment seminar of the Representative Office in New York on May 19th, 2017. Heads of Consulate General of the People's Republic of China in New York and local Chinese institutions, representatives of CIC's partners, and CIC IAC members were invited to attend the event. The Representative Office in New York will fully leverage New York's position as an international financial center to conduct research on regional economy and financial market, and further enhance exchange and cooperation with local institutions.

 

In 2016, CIC's overseas portfolio posted a net annual return of 6.22% and a net cumulative annualized return of 4.76% since its inception (all measured in US$).

Investment Performance on the Global Portfolio (all measured in US$)
Year Net cumulative annualized return Net annual return
2008a -2.1% -2.1%
2009 4.1% 11.7%
2010 6.4% 11.7%
2011 3.8% -4.3%
2012 5.02% 10.60%
2013 5.70% 9.33%
2014 5.66% 5.47%
2015 4.58% -2.96%
2016 4.76% 6.22%

a. Net cumulative annualized returns and the annual return for 2008 are calculated since inception on 29 September 2007.

了解投资原则内容 更多风险管理内容