Temasek boosts bets on public stocks, pursues ‘active alpha’

Temasek Holdings has invested more into public equities in the last 18 months than it traditionally has done, according to chief executive officer Dilhan Pillay.

The state-owned investor, which managed assets with a net portfolio value of S$434 billion as of Mar 31, has created an “active alpha” relative return strategy, Pillay said at the Milken Institute Asia Summit in Singapore on Wednesday (Oct 1).

“It’s a bit of an aberration for us, because we’re generally absolute return,” he said. “But we did that in order to build up the muscle that we need to have, to be able to get the best out of our public market investing, and that includes conversion of private into public.”

Under Pillay, who has been CEO of the holding company since 2021 and has led the operational arm for longer, the firm increased its investments in private markets in an effort to generate better long-term returns.

But such deals can be opaque and illiquid, and part of the push has coincided with a sharp downturn on the amount of cash that investors can extract from their supposedly profitable portfolios. “Private companies are staying private for longer,” he said.

In its last fiscal year, Temasek made divestments worth S$42 billion – the biggest annual sum on record – while the percentage of its assets in private assets fell below its public holdings for the first time in four years.

The firm reported a 10-year total shareholder return of 5 per cent, a compounded and annualised measure that includes dividends. That fell short of the MSCI World Index of global stocks, which returned an annualised 10 per cent in the decade through March 2025.

Temasek recently said it would rearrange its portfolio from Apr 1 to sharpen its investment focus. It will create three new entities that would focus on its direct investments in global companies, its Singapore-based portfolio companies, and on managing the allocation of capital to invest in funds. BLOOMBERG