We thank Mr Raymond Koh Bock Swi for his views in his letter to the Straits Times Forum (Investment strategies at GIC, Temasek may be too conservative, July 19)

He noted that Singapore term deposits "can already earn up to 2 per cent in interest".

Temasek's portfolio gives us a steady dividend yield of about 3 per cent. This is one key source of funds for us to make new investments.

Mr Koh further recommended that Temasek aim for investments with "stable and attractive returns", and avoid the "unhealthy" feast-and-famine returns of 12.19 per cent two years ago, to 1.49 per cent last year.

Most investors recognise that a portfolio of mostly equities, like ours, is inherently volatile on a year-to-year basis.

This is offset by an expectation of higher positive returns over the long term. Returns are affected by the market value of listed assets.

These can fluctuate greatly depending on various factors, including the likelihood of interest rate cuts as far away as the United States.

Over the last decade or so, our one-year returns have ranged from -30 per cent in March 2009, to the +43 per cent rebound the following year.

However, over 10 years, we delivered a steady 9 per cent compounded annual total return to our shareholder.

In dollar terms, our net portfolio was up $183 billion, from a trough of $130 billion in March 2009, to $313 billion in March this year.

A return number will always depend on the starting point and the ending point.

This is why we report our returns (as well as rolling returns) over various periods, including longer periods, for a more complete picture of our performance. This is how we think as a long-term investor.

Our total shareholder returns include dividends that we pay to our shareholder. Conversely, any capital from our shareholder would not be counted as part of our returns.

We aim to deliver sustainable risk-adjusted returns over the long term, as an owner and generational investor.

We have actively reshaped and grown our portfolio over the years. Overall, we are comfortable that we have a resilient portfolio, which can deliver over various market cycles.

We don't manage our portfolio for "maximum returns". We also don't manage government surpluses, the official foreign reserves, or CPF savings.

Mr Koh and others may visit: http://tmsk.sg/cwWZr to understand more about our performance, and in particular, how we manage our investments and risks.

Stephen Forshaw

Head, Public Affairs

Temasek International