Temasek Review 2021

Total Shareholder Return

We track our total returns to our shareholder over various time periods.

Total Shareholder Return (TSR) is a compounded and annualised measure, which includes dividends paid to our shareholder and excludes capital injections from our shareholder. Our TSR over short, medium, and long time periods are a snapshot of our performance.

As at 31 March 2021, our Singapore dollar one-year TSR was 24.53%. Our three-year TSR was 7.29% and our 10-year TSR was 7%.

Our 20-year TSR was 8%, versus the Singapore 20-year annualised core inflation of 1.5%. Longer term 40-year TSR was 13%.

For each investment we make, a risk-adjusted cost of capital (RACOC) is derived bottom-up using a capital asset pricing model. Investments in riskier sectors or markets have a higher cost of capital. We impute premiums for illiquidity and other risks.

We use RACOC to normalise for risks taken, when we compare the relative attractiveness among investment opportunities. We may dial up or down the required spread over RACOC as a tool to tighten or loosen our investment risk appetite.

Depending on the external outlook and investment stance, we may choose to invest in opportunities with positive expected returns, which are below their respective RACOC. We deploy our excess liquidity in short term investments that may give us returns lower than our cost of capital, as we assess opportunities to deploy in longer term investments.

Our TSR is tracked alongside our overall risk-adjusted cost of capital, which is the weighted average risk-adjusted cost of capital across all our investments.