This is the secret strategy behind GIC's million-dollar returns

It acts as an anchor investor in bond issues.

Acting as a cornerstone investor in bond deals is helping GIC Pte boost returns on its fixed-income portfolio as yields persist near record lows and risks start to increase in the bond market, according to Singapore’s sovereign-wealth fund.

Companies that issue bonds directly to GIC when it acts as an anchor investor save on underwriting fees and part of those savings are passed on to the wealth fund, Chief Investment Officer Lim Chow Kiat said in an interview with the London-based Sovereign Wealth Center published Tuesday.

“Maybe we’re aware that a company needs ‘x’ billion for its capital expenditure, so we do almost an investment banker’s job,” Lim said. “The whole process helps us to understand the company better and to build a good relationship.”

Read the full report here.