Temasek’s Random Walk

Ashby Monk

When I was an undergraduate, I took a memorable finance class from Burton Malkiel.  In reading through the newly released Temasek Review 2009, I am reminded of a common theme from his course: ‘Don’t try to time the market.” In his view, you simply can’t; the market is a random walk. After seeing Temasek’s performance over the past 15 months, I can’t help but agree.  

Temasek’s portfolio dropped from S$185 billion in March 2008 to S$130 billion in March 2009. However, only three months later, the portfolio was back up to S$172 billion. By staying the course, Temasek avoided the types of timing penalties that invariably punish herd-mentality investors. Indeed, the total shareholder return compounded annually since inception is now back up to around 16% even after the global financial crisis! This is a remarkable return, which can only be sustained by taking a very long-term view on investments.   

Anyway, Temasek did divest a few investments that it ought not to have (i.e. Barclays), but for the most part the return to July reflects their ongoing commitment to a certain portfolio and risk budget.

1 Response to “Temasek’s Random Walk”


  1. 1 rien huizer September 18, 2009 at 10:45 pm

    Solid, responsible investment management does no harm. Hanging on to Barclays would have been a good idea though. In hindsight. Still, what is temasek’s core business? Investment? Being a conglomerate? Something else?


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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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