Temasek Holdings’s portfolio reached a record high $193 billion at the end of its last financial year. Its portfolio grew from a previous record of $186 in the preceding year, and it grew its net profit from $4.6 billion to $12.7 billion for the year ended March 31.

Is 4.6% Return high or low?

Take a look at Annualized Total Return to Shareholders as below. 3 years return around 1%, 1 year return 4.6%.  If you recall, Temasek’s last year return was 42%.

Recently, I met a client who showed me a fund, with excitement like discovering a gem, whose fact sheet stated it had more than 20% annualized return. I just asked him two questions:

• “How long does the fund exist?” — As expected, merely 4 years.
• “What is the maximum draw down of the fund?” — Again, as expected, 60%!

So is this fund manager better than Temasek Holdings?

While many investors want to get the returns like the professionals, it is hard for them to think like the professionals.  Now back to the chart below. While the short term returns are pretty volatile, In a longer period, i.e. 20 year, 30 years and even since inception, the returns are very consistent, between 15% to 17%.

If you are able to park $10,000 with Temasek since they started, you will have $3.3 million by just getting a annualized 17% return. so is the one year 4.6% high or low? Do I really care?

Temasek Review 2011 Total Return to Shareholder

Why do you have to focus the long term return?

Because you have to invest for the rest of your life. If you just want to make a windfall by buying stocks, I think you will be better off by throwing the money into casino. After all, you can still get free five star hotel stay, free food, free holiday, etc. By speculating in stock market, the person who will enjoy the hotel stay will only be your stock broker.

You can download the Full Temasek Review 2011 from this link.