Temasek Review 2022

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 investments made by our shareholder in Temasek’s shares. Our TSR over different time periods are a snapshot of our performance, with the longer time periods being more representative of our performance as a long term investor.

As at 31 March 2022, our Singapore dollar one-year TSR was 5.81%. Our three-year TSR was 8.79% 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 12%.

For each investment we make, an individual 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 the individual RACOC to normalise 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 individual RACOC. We deploy our excess liquidity in short term liquid investments that may give us returns lower than our cost of capital, as we assess opportunities to deploy in longer term investments.

We assess our performance by measuring our TSR against our overall RACOC, which is the weighted average RACOC across all our individual investments.