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, absolute return and long-term investments and cash and others. Public equity refers to equity investment in listed companies. Fixed income refers to Bonds, including sovereign, corporate, and agency bonds. Absolute return includes hedge funds and multi-asset investments. Long-term investments includes 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 2015
  • Internally Managed Assets versus Externally Managed Assets 

    As of 31 December 2015

 

Against a backdrop of complicated and rapidly changing global market conditions, CIC continued to manage its overseas investment activities prudently and effectively.

  • Public Market

    The public market portfolio of CIC can be categorized into public equity, fixed income and absolute return investments, where absolute return mainly refers to hedge fund strategies.

    CIC maintains a large proportion of index and enhanced-index investment in public market to effectively capture benchmark returns (Beta returns). To seek Alpha returns, CIC gradually carries out active strategies on the basis of enhancing external managers selection and in-house investment capacity. CIC has also set up a dealing room as part of its efforts to steadily build up in-house investment capability.

    In 2015, CIC prudently analyzed and proactively coped with the drastic volatilities in global stock and bond markets in 2015. For equity investment, the organizational structure of strategy and external managers was improved, and outstanding and distinctive managers with various characteristics and skills were hired. The varied investment philosophies and styles had effectively diversified the source of excess returns. Investment costs were carefully controlled. In addition, the in-house quantitative investment platform was set up and tested. For bond and absolute return investments, portfolio composition was adjusted and optimized by reducing the exposure to emerging market treasury bonds. External managers of developed economy treasury bonds, US aggregate bonds, and agency bonds were also adjusted. Post-investment monitoring and management were enhanced, and hedge funds and portfolio funds were optimized. For internally managed investments, CIC steadily built up its internal management capabilities through an improved investment process. The internally managed portfolio complemented the externally managed portfolio, and a few internally managed portfolios had significantly outperformed the benchmarks since their inception.

  • Fixed Income in Global Portfolio

    As of 31 December 2015
  • Public Equity in Global Portfolio by Region

    As of 31 December 2015
  • Public Equity in Global Portfolio by Sector

    As of 31 December 2015
  • Long-term Investment

    CIC responded to lower expectations on global asset returns and ever-growing downside risks in the investment environment in the following ways:

    Increasing investments in real estate and other assets that deliver stable returns: In 2015, CIC set up the Department of Real Estate that focused on large-scale direct investment projects in developed economies. In 2015, a total of nine investments were completed, all major real estate transactions in the recipient areas.

    Further tapping into investment projects from a Chinese angle: Leveraging its unique insight into China's economy and the rapid growth of the overseas investments of Chinese enterprises, CIC explored project opportunities from a Chinese angle and made a foray into promising emerging industries.

    Fully utilizing the private equity funds network to carry out investments: CIC continued to optimize the composition of its private equity fund portfolio by renewing or adding high-performing funds. It sought to establish strategic partnership accounts with a few outstanding managers to deepen win-win cooperation. Private equity credit was identified as an active independent strategy to capture market opportunities. In addition, CIC strengthened communication and engagements with managers and peer institutions to open up cooperation opportunities. The share of club deals and co-investments was thereby increased.

    Continuously strengthening post-investment management for direct investment projects: CIC beefed up its involvement and initiative in post-investment management, enhanced project risk control, and generated higher value through better management. CIC also prudently pared down or exited some investments and, hence, generated an inflow of approximately $10.6 billion.

  • Investment Management Activities of CIC Capital

    Incorporated in January 2015, CIC Capital has already completed its internal organization and gathered a team consisting of existing business staff and new professionals from around the world. Building on its direct investment advantages in traditional sectors such as energy, mining, agriculture, and infrastructure, CIC Capital has expanded its global outreach into industry-wide sectors such as equipment manufacturing through a competitive production capacity, industrial manufacturing, healthcare, consumer services, and high technology. Based on CIC's overseas investment policies and procedures, CIC Capital has formulated investment procedures, financial management processes, risk control, and human resource systems tailored to direct investment. A standard investment decision-making mechanism that suits the particularities of direct investment has also been established to safeguard the comprehensive progress of the direct investment business.

    In infrastructure, CIC Capital continued to ramp up its investments by actively participating in bidding for mature assets in developed countries and selectively considering Greenfield projects and emerging market infrastructure assets. In 2015, in partnership with other institutional and industrial investors, CIC Capital undertook a number of infrastructure investment projects. For example, CIC Capital joined a consortium of institutional investors to invest in Tank & Rast, Germany's largest owner and concessionaire of motorway service areas; together with China Merchants Holdings (International) Company Limited and COSCO Pacific Limited, it also invested in Kumport, the third largest container port in Turkey.

    In energy and resource sectors, CIC Capital stuck to the strategy of value investing and focused on investing in quality assets in distress and benefit from investment opportunities in major regional markets and segments. In 2015, CIC followed and conducted some scarce resource mining projects, including investment in the convertible bonds of Paladin Energy in Australia.

    In agriculture, CIC Capital actively explored overseas investment opportunities in partnership with domestic enterprises and investment institutions. It set up a dedicated team to undertake investments based on risk-return profiles and industry cycles in agricultural projects. Leveraging its long-term capital advantage, CIC Capital promoted the development of the entire industry chain and increased the effective supply of agricultural, forestry, animal husbandry, and fishery products. In addition to generating reasonable long-term returns, CIC Capital's investments created employment opportunities and boosted socioeconomic development in recipient localities. CIC Capital and COFCO Corporation also launched a joint venture, COFCO International Holdings, to build an international trade platform for agricultural products.

    In other sectors, CIC Capital strengthened project development and reserve projects and aimed to build a clear, rational direct investment strategy. Contacts were established with around 200 domestic and overseas companies, and projects in reserve covered about 20 industries in over 50 countries and regions. In addition, continuous efforts were made to enhance partnership building and strengthen project sourcing. In 2015, CIC Capital also carried out a number of investments in technology, media and telecommunications, and manufacturing.

    In bilateral, multilateral and platform funds, CIC Capital contributed 15% of funds to the Silk Road Fund in 2015 and was involved in communications and consultations on the European Union–China Cooperation Fund and the China-France Fund for Joint Cooperation with Third Parties.

  • 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 2015, CIC International (Hong Kong) continued to make systemic improvements, strengthen corporate management, and promote business innovation. In addition to the prudent management of its entrusted global investment-grade corporate bond strategy portfolio and China-Hong Kong equity strategy portfolio, CIC International (Hong Kong) launched a sub-strategy portfolio focusing on special credit opportunities among Chinese enterprises and achieved satisfactory performance. CIC International (Hong Kong) also used its geographical advantage to conduct active exchanges and interactions with peer institutions, while keeping a close watch on regional and global market dynamics, lending strong support to the company's investment research, networking, and post-investment management.
  • In December 2015, CIC established the CIC New York Representative Office. CIC will leverage New York's position as an international financial center to keep up effectively with new developments in regional economies and financial markets and enhance the engagement and cooperation with local institutions.

 

In 2015, CIC's overseas portfolio posted a net annual return of -2.96% and a net cumulative annualized return of 4.58% since its inception.

Investment Performance on the Global Portfolio
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%

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