Investment Portfolio

As a large, long-term institutional investor, 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. CIC focuses on asset allocation based on four principles: (a) compliance with the long-term return objectives and risk tolerance approved by the Board of Directors; (b) alignment with CIC's characteristics and investment principles and philosophies; (c) based on academic research and the practices of other investment institutions; and (d) continuous optimization and improvement through investment practice.

At the end of 2015, CIC systematically reviewed and adjusted its asset allocation framework, officially adopting the Reference Portfolio framework, which consists of public market equities and fixed-income products obtained through passive low-cost products. The framework also included the Three-year Policy Portfolio, the Annual Policy Portfolio/Target Portfolio, and the Actual Portfolio. The Reference Portfolio serves as the anchor for the risk target of the overall portfolio and the benchmark for medium- to long-term relative performance. The Three-year Policy Portfolio makes allocations to other asset classes and active strategies and is expected to outperform the Reference Portfolio with a higher risk-return profile. The Annual Policy Portfolio/Target Portfolio takes into account the progress of alternative investment and short-term market views. The framework has improved the transparency and effectiveness of asset allocation and overall portfolio management. Today, many sovereign wealth funds, pension funds, and peer institutions in other countries are using the Reference Portfolio 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 as a key indicator for evaluating our performance.

  • Global Investment Portfolio Distribution

    As of 31 December 2017

    Internally Managed Assets versus Externally Managed Assets1 

    As of 31 December 2017

 

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 2017, CIC International continued to advance detailed-oriented management for public market investments and to optimize portfolio structure for higher excess returns. 

    Public market equities. CIC International consistently monitored its existing investments and optimized their structure based on market dynamics and market views. To expand the sources of excess returns, it pursued medium- to long-term investments themes such as infrastructure, healthcare, and information technology. The company also optimized its internally managed quantitative portfolio to improve market adaptability. 

    Bonds and absolute returns. The current bond strategy was reviewed and asset managers were assessed to allow greater autonomy to the stronger performers. The company's hedge fund strategy focused on post-investment monitoring, and hiring additional managers and adjusting existing ones based on performance. The company increased investment in the multi-asset strategy based on the asset allocation framework to further diversify risks.

  • Fixed Income in Global Portfolio

    As of 31 December 2017

    Public Equity in Global Portfolio by Region

    As of 31 December 2017

    Public Equity in Global Portfolio by Sector

    As of 31 December 2017

CIC International Long-term Investment

In 2017, CIC focused on buttressing asset allocation, enhancing strategic research, and improving the investment performance of its long-term assets. It also combined investment decision-making and project supervision to better manage them. In 2017, the company approved or signed agreements for 49 private equity, private credit, and real estate projects, and fully or partly exited several, delivering satisfactory results.

Private equity and private credit. The company evaluated and categorized fund managers and increased, as appropriate, its commitment to funds with strong long-term performance. It adopted new methods for account management and refined decision-making to capture attractive investment opportunities and strengthen co-investment and co-sponsorship with fund managers. Building on trust and mutual benefit, the company went beyond the traditional limited partner-general partner structure and deepened its cooperation with a handful of top-tier, highly competent investment institutions.

Real estate. The company selected and invested in superior funds and renewed its commitment to high-performing fund managers. It also imposed stringent risk controls, looked for quality projects that offer platform value with an established operating model, and sought market segments and investment opportunities in less efficient markets.

Post-investment management. The company closely tracked and regularly reviewed projects it had invested in and developed project-based management plans. It also analyzed industrial cycles and regional market trends to spot opportunities and reduce or exit investments as appropriate.

  • Investment Management Activities of CIC Capital

    In 2017, CIC Capital furthered its efforts in strategic planning and research by drafting and completing the "CIC Capital Corporation Business Development Outline for 2017-2026." The outline reviews the company's experience in direct investment and encourages the creative pursuit of direct investment. It also includes plans for:

       - Amended investment management policies and continued improvement of procedures for legal affairs, risk management, investment decisions, financial management, and operations management.
       - An optimized human resource management structure and incentive system.
       - Long-term strategic partnerships with international investors and the alignment of projects and cooperative efforts with several Chinese companies.

    In 2017, CIC Capital completed investment decisions for 20 projects, with a total committed investment of $3.8 billion in the following areas:

    Infrastructure. CIC Capital continued to beef up the screening and selection of infrastructure subsectors for investment and has been closely looking for opportunities in transport and energy infrastructure. The company also made forays into car parks, telecommunications, and power transmission and distribution. It sought a broad, structurally balanced basket of quality infrastructure assets spread across regions, sectors, and project phases.

    Energy. By leveraging opportunities arising in industrial business cycles, CIC Capital actively managed existing investments and captured favorable exit windows while steadily increasing exposure to new energy, optimizing the current portfolio, and diversifying risks over the long term. Industry-wide investments. To invest from the Chinese perspective, CIC Capital laid out a strategic framework for healthcare, advanced manufacturing, consumer goods and services, and technology, media, and telecommunications—and it began investments in these sectors.

    Agriculture. Through CIC Janus Asset Management Company, CIC Capital continued to study, review, and develop valuable subsectors for deep cooperation with Chinese and foreign companies and investors. Investments in the agricultural sector include farmland, dairy, and fisheries. CIC Capital has actively developed a direct investment platform for specialized agricultural investment overseas.

    Multilateral and bilateral funds. CIC Capital increased its capital investment in the Silk Road Fund, established the China-Ireland Technology Growth Fund II, and completed the second round of capital injection into the Russia-China Investment Fund. It also worked on China-Mexico Binational Investment Fund and Sino-French Third Countries Investment Fund.

  • 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 2017, CIC International (Hong Kong) adhered to the existing investment and research discipline to actively and prudently managing five portfolios: the global investment-grade corporate bond strategy portfolio, China-Hong Kong equity strategy portfolio, the internally managed Asian equity portfolio, the sub-strategy portfolio focusing on special opportunities among Chinese enterprises and the US high-yield bond portfolio. It also established the Emerging-Markets Local-Currency Bond portfolios. The company also leveraged its geographical advantage to closely monitor regional and global market
    dynamics and conduct active exchanges and interactions with peer institutions to buttress support for the company's investment research and expand investor relations. CIC International (Hong Kong) made breakthroughs in identifying investment targets and provided support through post-investment management, which drives powerful two-way communication and effective synergy. The company had $12.78 billion in total asset under management by the end of 2017.
  • In 2017, the Representative Office in New York has leveraged on New York City's resources and position as an international financial center to expand CIC's business network and identify potential investment opportunities. The office's efforts in business network development as well as its in-depth research in the regional economy, financial markets and regulatory trends have strengthened the company's connection, communication and cooperation with local business partners, and have provided support to the company's investment activities in Americas.

 

In 2017, CIC's overseas portfolio posted a net annual return of 17.59%. As of December 2017, it had exceeded its ten-year investment performance target to realize a net cumulative annualized return of 5.94% (above rates all denominated in US$).

Investment Performance on the Global Portfolio (all denominated 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%
2017 5.94% 17.59%

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

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