CIC posts higher returns due to riskier overseas investments

China Investment Corporation (CIC), the country’s sovereign wealth fund, announced that it earned an 11.7% return on its foreign asset portfolio for 2010, largely thanks to higher-risk investments, the Wall Street Journal reported. CIC’s annual report revealed a portfolio re-structuring towards riskier “alternative” asset classes, including private equity, real estate and infrastructure. The fund’s exposure to alternative assets leapt to 21% at the end of last year from just 6% in 2009. Meanwhile, its cash assets fell to 4% last year from 32% in 2009. CIC extended its investment horizon in January to 10 years from the previous five years, a move it hopes will allow the fund to “accept a higher risk-return profile in its investment portfolio in order to better balance short-term pressure and long-term interests.” CIC currently faces questions regarding how much funding it should be allowed by the government.