The Government of Singapore Investment Corporation (GIC), the veteran state asset manager and model for sovereign wealth funds around the world, has warned that the global investment scene may never be the same again.

The fund’s chief investment officer said that it was now “unrealistic” to expect that the sort of returns achieved over the past two decades could be repeated in future. The environment, said Ng Kok Song, will be more challenging than at any time since the secretive sovereign wealth fund was established in 1981.

“The powerful trend of disinflation that propelled the global capital markets over 25 years seems to have ended,” he added.

Peeping out from the veil of secrecy it has worn for the 27 years since its creation, the GIC yesterday issued its first ever financial report: the fund, which was a notoriously conservative investor until it adopted a more aggressive pose a few years ago, revealed that it had reaped real annual returns of 4.5 per cent over the past two decades.

Massive turmoil in the main targets of GIC’s investment strategy - equity markets, real estate and commodities – will continue to reduce returns, and investors everywhere should be wary of assuming that the worst is over, said senior executives of the Singaporean fund.

Earlier this year, the GIC joined the other Singaporean SWF, Temasek and the China Investment Corporation in building hefty stakes in the worst-hit firms on Wall Street. As part of that wave of capital injections, GIC bought large chunks of UBS and Citigroup.

Todays' comments by senior GIC directors were part of an unprecedented glimpse into the enigmatic culture of the fund, which has plunged more than $100 billion into 40 markets around the world, but which is notoriously guarded about the identity and size of its investments.

GIC’s chairman is Lee Kwan Yew, the “Minister Mentor” who has presided over the growth of the city state and the expansion of its economy with an iron grip.

The culture of secrecy – even GIC’s brokers are not sure what stocks the fund has bought - has sparked concerns in the US and Europe that large SWFs could pursue geopolitical agendas through their investments. Yesterday’s financial report – and the promise that the document will be an annual publication – was an attempt to defuse those worries.

Even then, the report was not packed with revelations and devoted a large amount of space to praising the investment canniness of its managers.

But it did emerge that GIC is a heavy investor in the United States and Japan.

Despite the explosive volatility of recent weeks, GIC’s deputy chairman, Tony Tan, said that he was confident in the US economy.

“In the short and medium term, we should not underestimate the problems and adjustments that are needed in U.S. economy and financial system,” he said, “but in the medium to longer term, the U.S. economy remains one of the most innovative and flexible developed economies in the world and will continue to be a most important part of the portfolio of any global investor, including the GIC.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive