China Investment Corporation: Why It's One of the Greatest Investments of All Time
|
| China Investment Corporation |
China Investment Corporation is a sovereign wealth fund that manages a portion of the People's Republic of China's foreign exchange reserves. CIC was founded in 2007 and manages roughly $200 billion in assets. The CIC managed approximately US$941 billion in assets at the end of 2017.
What is China Investment Corporation?
China Investment Corporation is not a publicly traded company. CIC does not set up a share register. As a sovereign wealth fund, CIC is not required to file financial statements, but it reports the majority of its profits to the People's Republic of China's State Administration of Foreign Exchange.
According to the China Banking Regulatory Commission, CIC is obliged to hold the balance of its assets in "fully and proactively disclosed financial assets". At the end of 2017, it reported investments in roughly 2,252 Chinese companies in roughly 3,500 domestic and foreign equity and bond mutual funds, of which 60% of the company's portfolio was invested in equities.
It invests in other sovereign wealth funds as well as private companies. CIC invests in other sovereign wealth funds.
The History of China Investment Corporation?
China Investment Corporation has been around for quite some time. The CIC was founded in 2007. According to its website, the agency manages a portion of China's foreign exchange reserves. To put that figure into perspective, China's foreign exchange reserves are the largest in the world, at $3.2 trillion as of the end of 2017.
Source: Financial Times China Investment Corporation was designed to capitalize on rising Chinese economic growth and opportunities for investments in the world. To reflect the growth potential, the assets that CIC manages were doubled in 2010.
The newly expanded group of assets, as well as other cash resources and physical investments, was then rebranded China Investment Corporation in 2013. The CIC has invested in a variety of sectors.
China Investment Corporation's Investment Strategy
For purposes of this section, I will compare China Investment Corporation's investment strategy to Vanguard's investment strategy. Note that Vanguard has a great collection of passive investment options that they offer their clientele.
We will discuss Vanguard's investment strategy in greater detail in future articles. China Investment Corporation: Investment Strategy China Investment Corporation follows the following investment strategy:
China Fund (CIC) High Income Fund (CHISX) Fixed Income Fund (CIF) Fund of Funds (FOND) Total Market Value Fund (VFVX) Commodity Fund (CEFX) Global Growth & Income Fund (GDI) Social Security Income Fund (SSIFX) China Fund has a yield of roughly 3.25%.
What are the benefits of investing in China Investment Corporation?
Chinese domestic investors: China Investment Corporation's mandate is to invest in companies which have a positive impact on the country's economy and with a long-term view of growth.
With this mandate, it is actively looking to invest in companies in all sectors and jurisdictions, while also creating a favorable investment climate by offering lower risk opportunities. Chinese investment dollars: With its vast number of retail investors, CIC's stock is a highly desirable investment for those looking for Chinese capital.
More than 90% of CIC's institutional investment decisions are made by retail investors. This is because CIC is looking for investment opportunities that are clearly well received by its investor base, and offering attractive yields for retail investors.
Conclusion
In this article, we covered the five largest sovereign wealth funds in the world, what they invest in, what their risks are, and where they are investing capital for the future. One of the largest sovereign wealth funds in the world is China Investment Corporation, with a capitalization of approximately US $941 billion.
Like many other sovereign funds, CIC is, however, actively managing capital and looking to invest in new asset classes. Approximately a quarter of CIC's assets are in equities, and it has several major investments.
These include shares of a handful of major U.S. tech companies, such as Apple, Alibaba, JD.com, and Baidu. CIC's holdings in the technology sector are up 27% over the last two years, and the sovereign fund's total allocation to tech currently stands at 7.1%.
For More News Visit
