20-year Returns Outlook
Our Temasek Geometric Expected Return Model, or T-GEM, simulates the range of possible returns for our portfolio over a 20-year period. These simulations do not predict actual outcomes.
Economic Scenario-Based Approach
T-GEM uses a scenario-based approach to simulate our 20-year long-term expected returns, taking into account our views around the long-term fundamental impact from macroeconomic and geopolitical events, as well as climate risks.
20-year Expected Returns for Various Temasek Scenarios
We simulate our 20-year expected returns under different scenarios.
Potential Scenarios for 2025 and Beyond
Potential Scenarios |
Description |
Central (Our most likely scenario) |
Our baseline expectations of long-term growth and inflation that also include structural challenges from climate change as well as heightened geopolitical tensions.
|
Differing Climate Change Pathways (Less likely scenarios) |
Our “High Ambition” scenario assumes structural shifts enabling greater mitigation efforts to slow the rise in temperatures. Our “Low Ambition” scenario assumes persistent structural barriers resulting in no further mitigation efforts, which lead to a disastrously steep rise in temperatures by 2100.
|
20-year Expected Returns for Different Portfolio Mix
The charts below illustrate the simulated returns for a Global Bond Portfolio, a Global Equity Portfolio, and the Temasek Portfolio. The simulations are based on our Central Scenario.
The Global Bond Portfolio has the lowest upside potential, as compared to the Global Equity and Temasek Portfolios. It also has the least volatility, as shown by its narrower year-to-year annual returns distribution curve.
The Temasek Portfolio has the highest upside potential (see blue shaded) at the end of the 20-year period, but also the highest volatility.
Likelihood of Geometric Returns (Compounded Annualised) at the End of 20-year Period, by Portfolio Mix
1 The Global Equity Portfolio uses the MSCI ACWI as a proxy.
2 The Global Bond Portfolio uses government bonds within the Bloomberg Global Aggregate Index as a proxy.
Likelihood of Year-to-year Annual Returns during 20-year Period, by Portfolio Mix
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