Performance & Portfolio

While we adopt a long-term view of our portfolio, we invest across different time horizons. We have the flexibility to take concentrated positions and invest across all stages of the business life cycle from early stage to mature, and unlisted to listed assets. We do not have specific targets for investing by asset class, country, sector, or single name.

Our long investment horizon means our portfolio comprises predominantly equities, which are intended to deliver higher risk-adjusted returns over the long term. Our resilient balance sheet allows us to invest in and benefit from companies with high growth potential through listed and unlisted assets (including private equity funds).

Consequently, given our portfolio’s large exposure to equities, our portfolio is expected to have higher volatility of returns, with greater risk of negative returns in any one year.

Our investment approach is to ride out short-term market volatility and focus on generating sustainable returns over the long term.

Given the expected volatility, we manage our leverage and liquidity prudently for resilience and investment flexibility, even in times of extreme stress.

Our investment posture is coupled with a culture of risk ownership throughout the organisation. Our risk-sharing compensation philosophy puts the institution ahead of the individual, emphasises the long term over the short term, and aligns the interests of our staff with those of our shareholder.

We have no tolerance for risks that could damage the reputation and credibility of Temasek.

We are guided by our Organisational Risk Management Framework. This includes Risk Return Appetite Statements that set out various levels of risks tolerance, from reputational risk to liquidity risk, and risk of sustained loss of overall portfolio value over prolonged periods.

Risk Governance

There are various risk pillars by which we assess risks across a wide spectrum of domains. These risk pillars are supported by specialised teams, comprising members from different functions, which report to senior management for general oversight. We embed risk management in our systems and processes. These include our approval authority delegation, company policies, standard operating procedures, and risk reporting to our Board and Board Risk & Sustainability Committee.

Investment Risk

All new investment proposals are subject to a due diligence process commensurate with the nature of the investment to be made. This is intended to validate investment theses and examine material risks. The exact scope of the required pre-investment analysis will be determined based on the specific risk profile being considered. Pre-investment analysis is done by our deal origination teams, whose expertise is supplemented by internal experts or external professionals who perform additional due diligence in specialised areas such as commercial, legal, tax, and climate risks.

Each investment is assigned an appropriate risk-adjusted cost of capital that takes into account the investment’s overall risk characteristics, such as industry risk and capital structure. Investments with greater risk will have higher costs of capital.

Prospective investments are reviewed and approved by our investment committees.

Investment proposals made to the investment committees are typically submitted by market and/or sector teams who provide geographic and industry expertise. Depending on the size or risk significance, these proposals may be escalated to our Board Executive Committee or Board for a final decision.

Post-investment monitoring is performed by the investment teams on a continuous basis, and formally by senior management at quarterly review meetings chaired by the Deputy CEO. They assess if the investment is performing to our expectations and whether any action should be taken.

Foreign Exchange Risk

Our projected risk-adjusted return for each investment proposal takes into account any anticipated foreign exchange (FX) movements against the Singapore dollar.

We also selectively hedge FX exposures, for example, from confirmed nearer-term cash flow and expected divestments within our forecast period.

Environmental, Social, and Governance Risk

Our investments are evaluated on the basis of our Environmental, Social, and Governance (ESG) framework, which is integrated within the investment process and requires the analysis of material considerations across the relevant factors.

As part of our analysis, we apply an internal carbon price of US$65¹³ per tonne of carbon dioxide equivalent (tCO₂e)¹⁴. This provides an additional consideration to our assessment of the long-term climate resiliency and our returns expectations for each investment.

To identify potential material social risks, we integrated a social baseline risk assessment into our pre-investment due diligence process.

We also consider a company’s corporate governance policies and procedures to assess transparency and accountability around its corporate activities.

Find out more on how we embed ESG as part of our investment process

Liquidity & Leverage Risk

We manage our leverage, liquidity, and balance sheet prudently for resilience and flexibility. We maintain a high level of liquidity in our portfolio and manage our liquidity risk by ensuring that our primary recurring sources of cash flows are able to cover our non-discretionary uses of cash, such as operating expenses, taxes, and interest payments.

Our recurring income includes divestments, dividends from portfolio companies, and distributions from funds.

Our liquidity is supported primarily by our recurring income, supplemented by proceeds from any debt issuances via Temasek Bonds and Euro-commercial Paper, as well as bank borrowings. Total leverage is restricted by an overall debt limit set by our Board. The debt limit takes into account our portfolio value, shareholder funds, forecast cash flow, and credit profile. We proactively aim for a well-distributed debt maturity profile, avoiding disproportionately large debt repayment obligations in any one year.

In addition to maintaining the discipline of regular divestments to generate liquidity, the construction of our portfolio enables us to access liquidity relatively quickly in times of stress. As at 31 March 2025, our liquid and sub-20% listed assets alone were about six times our debt outstanding. In the highly unlikely extreme scenario where we have no other cash inflows, aside from using our liquidity balance, divesting a small part of our liquid and sub-20% listed assets would be sufficient to cover the total debt outstanding in under two weeks¹⁵.

As a policy, Temasek does not provide any financial guarantees for the obligations of our portfolio companies.

Portfolio Value Risk

We track and manage risks proactively, through economic and market cycles, including specific risks at the asset level.

We assess the sustained impact of multiple risk scenarios on the intrinsic value of our investments. The aggregate of these changes provides an estimate of the portfolio-level variation in present value, future cash flows, and income in each scenario.

As illustrated in the diagram below, Fundamental Earnings Impact is our estimate of sustained loss. This is different from Trough Impact, which includes mark to market effects due to short-term increases in risk aversion. In a stress event, our largely equity portfolio will likely be adversely affected by market volatility, reflecting increased short-term risk aversion. However, markets typically recover from the trough and normalise after the stress event is over. Over time, we expect our portfolio value to recover towards the previous growth rate, but from a lower starting point.

We do not manage our portfolio based on short-term mark to market changes.

Illustration of Fundamental Earnings Impact

• Base Case
• Stress Scenario

Based on our assessments of any likely sustained loss, consistent with our intrinsic value discipline, we may manage the risks as follows:

• Divest, hold, or protect the individual investment impacted
• Change the portfolio composition for the long run
• Take actions to protect the portfolio, for example, by entering into tactical single stock, index, or rates hedges

12-months Returns Simulation

While we expect volatility consistent with a largely equity portfolio, we manage our portfolio to deliver sustainable returns over the long term.

For our current portfolio mix, our Monte Carlo simulations based on recent market conditions show a five-in-six chance that one-year forward portfolio returns will be within the range of -10% to +18%. Over the last 20 years, our actual annual returns have ranged from -30% at the height of the Global Financial Crisis (GFC) for the financial year ended 31 March 2009, to +43% the following year as markets recovered.

(as at 31 March)

Volatility of Returns (%)

• Simulated returns¹  in a period of low market volatility
• Simulated returns¹  in a period of medium market volatility
• Simulated returns¹  in a period of high market volatility
• Actual Total Shareholder Return

¹ Based on Monte Carlo simulation for 12-month forward portfolio returns distribution, assuming no change in market conditions or portfolio mix.

The range of possible returns from the simulation is dependent on the prevailing volatility and correlation conditions of asset markets. When prevailing volatility is high, such as at the onset of the COVID-19 pandemic or during the GFC years, the wider range of one-year simulated forward returns signals greater probability of larger gains and losses. When volatility is low, simulated forward returns fall within a narrower range. However, history shows that periods of lower volatility may be followed by sudden dislocations. We therefore complement our simulation with stress case valuations.

We have institutionalised a risk incident reporting process which encourages staff to proactively report gaps, perform root cause analysis, and adopt appropriate remediating measures for all reported risk incidents. This fosters an ownership mindset with a focus on excellence and helps build a healthy risk management culture in Temasek.

Whenever the need arises, we provide the necessary support to our staff, regardless of their location. Additionally, we have established an internal in-country alert system to keep our workforce informed of potential risks and travel restrictions.

We have implemented a firm-wide comprehensive staff training programme. For example, all employees participate in Workplace Safety and Health training which aims to raise awareness of potential workplace hazards and increase staff knowledge and readiness in managing workplace emergency situations. Additionally, our Evacuation Warden team receives occupational first aid training, while our Business Continuity Planning Coordinators and front-line Emergency Response Team undergo emergency response training.

To holistically manage crises, we have integrated our Care Supporters network into our crisis management response, so that we can better look after the mental well-being of our staff following a traumatic event. We also conduct regular exercises, designed to be as realistic as possible, to test and improve our response protocols and processes.

Cybersecurity Risk

Cybersecurity threats have intensified and become increasingly sophisticated with the advent of Artificial Intelligence (AI). As such, we continue to step up our defences and enhance our cybersecurity effectiveness and resilience.

We have fortified our cybersecurity capabilities along four fronts:

Firstly, within Temasek, we have modernised our cybersecurity policies, standards, and governance frameworks. These include an AI governance framework and AI Responsible Use Committee to mitigate the risks brought about by the use of generative AI. We ensure that our cybersecurity controls are effective and consistently applied worldwide so that our staff can work safely from anywhere around the globe. We have also established a comprehensive and integrated cybersecurity technology stack that protects and monitors our digital assets.

Secondly, to address supply chain risks, we have set up a third-party risk management process and monitoring capability. We also assess the cybersecurity health of potential investee companies as part of our investment due diligence process. Our assessment is based on four areas: key data assets; regulatory requirements and data privacy; cybersecurity policy and governance; and cybersecurity assessment and incidents. A comprehensive cybersecurity scan on potential investee companies may also be conducted.

Thirdly, we continue to engage our portfolio companies through initiatives that champion cybersecurity best practices and elevate our respective cyber defence and resilience capabilities.

Lastly, we collaborate with government regulators like the Cyber Security Agency of Singapore (CSA) to leverage best practices and strengthen our capabilities. Our efforts have been reviewed under CSA’s Cyber Trust mark certification, which placed us in the highest tier for cybersecurity preparedness.

Legal, Regulatory & Tax Risk

We comply with Singapore laws and regulations, including those arising from international treaties and UN sanctions, as well as the laws and regulations of jurisdictions where we have investments or operations.

We also comply with applicable laws, statutory obligations, and disclosure requirements relating to taxation in the jurisdictions in which we operate. We aim to ensure our tax positions are aligned with our commercial and business purposes, in compliance with these tax laws and regulations.

Our global footprint, coupled with an ever-evolving legal and regulatory environment and enforcement posture taken by authorities, reinforces the importance of robust and dynamic investment processes and compliance programmes. We continue to build expertise across novel and developing areas that impact what we do, so as to identify and manage legal, regulatory, and compliance risks appropriately.

Our Legal & Regulatory department designs and implements appropriate policies, processes, and systems that are consistent with applicable laws and aligned with Board directives to advance the firm’s objectives, while managing risks and safeguarding its interest. We continuously monitor regulatory and market developments so that our policies, procedures, and monitoring systems remain relevant.

We encourage and facilitate the development of a sound corporate culture that incentivises good staff behaviour. High ethical standards and compliance with applicable laws and regulations are expected in the pursuit of our business interests. Specific attention is directed at governance, incentive systems, and training.

At the core of this is our Temasek Code of Ethics and Conduct (T-Code) and its related policies that guide our Board directors and staff in their daily dealings and conduct. With integrity as the key overarching principle, T-Code policies cover areas such as anti-bribery, whistle-blowing, management of confidential information, and prohibition against insider trading. All staff also undergo mandatory training in anti-bribery and corruption, anti-harassment and discrimination, as well as the prevention of insider trading. Our annual staff bonus plans include T-Code compliance requirements.

Macro and Geopolitical Risk

Over the last decade, besides the ever-changing macroeconomic landscape, we have seen heightened geopolitical tensions arising from events such as war and the pandemic, as well as great power rivalry placing stress on the existing world order. In recent times, protectionist measures have been deployed for resilience and sovereignty. This strategic contestation has reduced the openness of the global trading and investment framework.

Our views on these developments in the global economy help to guide Temasek’s investment stance and our overall deployment pace. We also recognise that there has been a renewed and urgent focus on national security (encompassing economic security and competition), resiliency including energy and commodity sufficiency, data ownership, techno-nationalism in sectors such as biotechnology, and the use of subsidies, to name a few pressing issues. The presumptive gains from the globalisation of trade, investment, and technology are subject to ever-greater scrutiny and scepticism, with the traditional principles-based discourse being replaced with the assertion of economic and national self-interest.

To stay ahead of these developments, our International Policy and Governance teams — located in Beijing, Brussels, Singapore, and Washington, DC — actively monitor geopolitical risks and anticipate policy developments in our key markets that could impact our activities.

Through our engagement with thought leaders and authorities, we exchange views so as to promote better outcomes for all in the design and implementation of policy. In particular, we aim to promote a better understanding of how we operate based on commercial principles, and independent of government interference and support. For example, we had supported the International Monetary Fund initiative to frame the Santiago Principles for sovereign investments back in 2008. We advocate good governance and uphold these principles.