Performance & Portfolio

While we adopt a long-term view of our portfolio, we invest across different time horizons. We have the flexibility to take concentrated positions and invest across all stages of the business life cycle from early-stage to mature, and listed to unlisted assets.

Our long investment horizon means our portfolio comprises predominantly equities, which are intended to deliver higher risk-adjusted returns over the long term. Our resilient balance sheet allows us to invest in and benefit from companies with high-growth potential through listed and unlisted assets (including private equity funds).

Consequently, given our portfolio’s large exposure to equities, our portfolio is expected to have higher volatility of returns, with greater risk of negative returns in any one year.

Our investment approach is to ride out short-term market volatility and focus on generating good sustainable returns over the long term.

Given the expected volatility, we manage our leverage and liquidity prudently for resilience and investment flexibility, even in times of extreme stress.

Our investment posture is coupled with a culture of risk ownership throughout the organisation. Our risk-sharing compensation philosophy puts the institution ahead of the individual, emphasises the long term over the short term, and aligns the interests of our employees with those of our shareholder.

We have no tolerance for risks that could damage the reputation and credibility of Temasek.

We are guided by our Organisational Risk Management Framework. This includes Risk Return Appetite Statements that set out various levels of risks tolerance, from reputational risk to liquidity risk, and risk of sustained loss of overall portfolio value over prolonged periods.

Risk Governance

There are various risk pillars by which we assess risks across a wide spectrum of domains. These risk pillars are supported by specialised teams, comprising members from different functions, which report to senior management for general oversight. We embed risk management in our systems and processes. These include our approval authority delegation, company policies, standard operating procedures, and risk reporting to our Board and Board Risk & Sustainability Committee.

Investment Risk

All new investment proposals are subject to a due diligence process commensurate with the nature of the investment to be made. This is intended to validate investment theses and examine material risks. The exact scope of the required pre-investment analysis will be determined based on the specific risk profile being considered. Pre-investment analysis is done by our deal origination teams, whose expertise is supplemented by internal experts or external professionals who perform additional due diligence in specialised areas such as commercial, legal, tax, Environmental, Social, and Governance (ESG), and Artificial Intelligence (AI)-related risks.

Each investment is assigned an appropriate risk-adjusted cost of capital that takes into account the investment’s risk characteristics, such as industry risk and capital structure. Investments with higher risk will have higher costs of capital. For these investments, we require higher expected returns, which generally provide a positive spread over the risk-adjusted cost of capital.

Prospective investments are reviewed and approved by our investment committees.

Investment proposals made to the investment committees are typically submitted by market and/or sector teams who provide geographic and industry expertise. Depending on the size or risk significance, these proposals may be escalated to our Board Executive Committee or Board for a final decision.

Post-investment monitoring is performed by the investment teams on a continuous basis, and formally reviewed by senior management at quarterly meetings. These reviews assess if each investment is performing in line with our expectations and whether any action should be taken.

Foreign Exchange Risk

For the majority of investments, our projected risk-adjusted return for each investment proposal takes into account any anticipated foreign exchange depreciation against the Singapore dollar.

We also selectively use foreign currency hedges, taking into account various factors such as overall exposure across the portfolio, the in-house view of a currency, cost of hedging, and any divestment plans.

We may also borrow in foreign currencies which can provide a partial natural hedge.

Environmental, Social, and Governance Risk

Our investments are evaluated on the basis of our ESG framework, which is integrated within the investment process and requires the analysis of material considerations across the relevant factors.

For all new investments, we evaluate a company’s carbon footprint, assess physical and transition risks, and identify opportunities arising from technological, regulatory, and market shifts. Where assets are located in or near ecologically sensitive areas, we apply our biodiversity risk assessment tool to identify potential risks. If the environmental risks are material, we review the company’s ability to mitigate or adapt to these risks.

We also conduct social baseline risk assessments for all new direct investments to identify potential material social risks, such as those related to human rights, labour standards, and workplace safety.

As part of our due diligence, we also review companies’ oversight structures, their approach to ESG governance, and adequacy of policies for transparency and regulatory compliance.

Find out more on how we embed ESG as part of our investment process

Liquidity & Leverage Risk

We manage our leverage, liquidity, and balance sheet prudently for resilience and flexibility. We maintain a liquid portfolio and manage our liquidity risk by ensuring that our primary recurring sources of cash flows are able to cover our non-discretionary uses of cash, such as operating expenses, taxes, principal repayments, and interest payments due in the next 12 months.

Our recurring income includes divestments, dividends from portfolio companies, and distributions from funds.

Our liquidity is supported primarily by our recurring income, supplemented by proceeds from any debt issuances via Temasek Bonds and Euro-commercial Paper, as well as any bank borrowings. Total leverage is restricted by an overall debt limit set by our Board. The debt limit takes into account our portfolio value, shareholder funds, forecast cash flow, and credit profile.

We ensure sufficient liquidity to meet debt obligations in the next 12 months. Accordingly, we proactively aim for a well-distributed debt maturity profile, avoiding disproportionately large debt repayment obligations in any one year. Our maturities are well spread out, with the longest dated bond maturing in 2071.

In addition to our discipline of regular divestments to generate liquidity, the construction of our portfolio enables us to access liquidity relatively quickly in times of stress. As at 31 March 2026, our liquidity was more than sufficient to cover outstanding debt due in five years²¹ by 13 times. In the highly unlikely extreme scenario where we have no other cash inflows, aside from drawing on our available liquidity, divesting only a small proportion of our listed assets with stakes of less than 20% would be sufficient to cover the total debt outstanding in under two weeks²².

As a policy, Temasek does not provide any financial guarantees for the obligations of our portfolio companies.

Portfolio Value Risk

We track and manage risks proactively, through economic and market cycles, including specific risks at the asset level.

We assess the sustained impact of multiple risk scenarios on the intrinsic value of our investments. The aggregate of these changes provides an estimate of the portfolio-level variation in present value, future cash flows, and income in each scenario.

As illustrated in the diagram below, Fundamental Earnings Impact is our estimate of sustained loss. This is different from Trough Impact, which includes mark-to-market effects due to short-term increases in risk aversion. In a stress event, our largely equity portfolio will likely be adversely affected by market volatility, reflecting increased short-term risk aversion. However, markets typically recover from the trough and normalise after the stress event is over. Over time, we expect our portfolio value to recover towards the previous growth rate, but from a lower starting point.

We do not manage our portfolio based on short-term mark-to-market changes.

Illustration of Fundamental Earnings Impact

• Base Case
• Stress Scenario

Based on our assessments of any likely sustained loss, consistent with our intrinsic value discipline, we may manage the risks as follows:

• Divest, hold, or protect the individual investment impacted
• Change the portfolio composition for the long run
• Take actions to protect the portfolio, for example, by entering into tactical single stock, index, or rates hedges

For our current portfolio mix, our Monte Carlo simulations based on recent market conditions show a five-in-six chance that one-year forward portfolio returns will be within the range of -11.2% to +18.0%. Over the last 20 years, our actual annual returns²³ have ranged from -29.6% at the height of the Global Financial Crisis (GFC) for the financial year ended 31 March 2009, to +42.7% the following year as markets recovered.

(as at 31 March)

Volatility of Returns (%)

• Simulated returns¹ in a period of low market volatility
• Simulated returns¹ in a period of medium market volatility
• Simulated returns¹ in a period of high market volatility
• Actual Total Shareholder Return²

¹ Based on Monte Carlo simulation for one-year forward portfolio returns distribution, assuming no change in market conditions or portfolio mix.

² From the financial year ended 31 March 2026 onwards, the one-year Total Shareholder Return (TSR) will be reported on an MTM basis. The TSR prior to 31 March 2026 is reported on our prior valuation basis.

The range of possible returns from the simulation is dependent on the prevailing volatility and correlation conditions of asset markets. When prevailing volatility is high, such as at the onset of the COVID-19 pandemic or during the GFC years, the wider range of one-year simulated forward returns signals greater probability of larger gains and losses. When volatility is low, simulated forward returns fall within a narrower range. However, history shows that periods of lower volatility may be followed by sudden dislocations. We therefore complement our simulation with stress case valuations.

We have institutionalised a risk incident reporting process which encourages employees to proactively report gaps, perform root cause analysis, and adopt appropriate remediating measures for all reported risk incidents. This fosters an ownership mindset with a focus on excellence and helps build a healthy risk management culture in Temasek.

In parallel, we are advancing our digital transformation initiatives to enhance our business continuity and crisis management capabilities. We leverage automation tools to generate regular monitoring reports on travel risks, drawing on multiple reliable sources to track geopolitical developments and disease outbreaks. Whenever the need arises, we provide the necessary support to our employees, regardless of their location. Additionally, we have an internal in-country alert system to keep our workforce informed of potential risks and travel restrictions. To strengthen overall response effectiveness, we have also developed a Business Continuity Planning (BCP) Response application to streamline the employee accounting process during emergencies.

We have continued to implement a firm-wide comprehensive employee training programme. All employees participate in Workplace Safety and Health training which aims to raise awareness of potential workplace hazards and increase employee knowledge and readiness in managing workplace emergency situations. Additionally, our Evacuation Warden team receives occupational first aid training, while our BCP Coordinators and front-line Emergency Response Team undergo emergency response training.

We conduct regular exercises with our senior management, using scenarios designed to be as realistic as possible, to test and ensure that our response protocols and processes remain effective, relevant, and adequate. To holistically manage crises, we have also integrated our Care Supporters network into our crisis management response, enabling us to better support the mental well-being of our employees following a traumatic event.

Cybersecurity Risk

Cybersecurity threats continue to intensify and grow more sophisticated, driven by advances in AI and an increasingly volatile geopolitical landscape. We continue to strengthen our cyber defences to enhance cybersecurity effectiveness and resilience, whilst enabling safe and secure innovation across Temasek and our portfolio companies.

We have continued to develop a comprehensive AI governance framework and clear AI security standards to support the safe and secure deployment of AI across the company. A Responsible AI Use Committee guides and reviews AI use cases and embeds responsible AI principles across the organisation. We have also established an Agentic AI Security and Governance Framework to address the risks arising from autonomous and semi-autonomous agents. Together, these measures safeguard our assets, data, and portfolio companies.

We ensure that our cybersecurity controls are effectively and consistently applied across our global operations, enabling our employees to work securely from anywhere. This is supported by an integrated cybersecurity technology stack that protects and monitors our digital assets. Looking ahead, we are strengthening our cyber systems by building a diverse and flexible technology stack to adapt to evolving geopolitical risks and emerging threats, including the potential impact of quantum computing on data security.

To enhance our cyber monitoring and detection capabilities, we have developed advanced threat profiling, modelling, and analytical capabilities tailored to Temasek’s operating context. This enables earlier identification of emerging threats, sharper risk insights, and more proactive decision-making across Temasek and our portfolio companies.

Within our ecosystem, we continue to strengthen collective cyber resilience and champion cybersecurity best practices through active engagement with our portfolio companies. We also collaborate with government regulators like the Cyber Security Agency of Singapore (CSA) to share insights, align on best practices, and strengthen our overall cybersecurity capabilities. We underwent a review under CSA’s Cyber Trust Mark certification last year and were successfully recertified this year, affirming our continued cybersecurity preparedness at the highest tier.

Legal & Regulatory Risk

We comply with Singapore laws and the laws of the countries where we operate or invest, as well as international treaties and United Nations sanctions. Our global presence, combined with the dynamic legal and regulatory landscape, necessitates rigorous and adaptable investment processes and compliance programmes. We are committed to developing expertise in emerging areas to effectively identify and manage legal, regulatory, and compliance risks.

Our Legal & Regulatory department designs and implements policies, processes, and systems that align with applicable laws and Board directives, in order to manage risks and safeguard our interests. We vigilantly monitor regulatory and market changes to ensure our policies, procedures, and monitoring systems remain relevant and fit for purpose.

We foster a corporate culture that promotes ethical behaviour and compliance with laws and regulations. High standards of ethics are expected in pursuing our business interests, with a focus on governance, incentive structures, and training. Core to our compliance framework is our Temasek Code of Ethics and Conduct (T-Code), which guides our Board directors and employees in their daily activities. With integrity as an overarching principle, T-Code policies cover, among other things, anti-bribery, whistle-blowing, confidentiality, and insider trading. All employees undergo mandatory training in these areas and our annual incentive programmes include compliance with T-Code requirements.

Tax Risk

We are focused on delivering good sustainable returns over the long term for this and future generations. As a responsible corporate citizen, we comply with applicable taxation laws, statutory obligations, and disclosure requirements in the jurisdictions where we operate.

We aim to ensure our tax positions are aligned with commercial and business purposes, in compliance with these taxation laws and regulations. We maintain governance and controls to support accurate reporting, timely filings, and appropriate documentation, taking into account evolving tax rules and interpretations.

There may be tax risks, including changes in legislation, regulatory guidance, enforcement practices, and judicial outcomes. We manage such risks through ongoing active monitoring, engagement, and reviews of our tax positions to ensure we continue to deliver good sustainable returns over the long term.

Macro and Geopolitical Risk

The global order and the multilateral system have undergone a significant shift in the past decade. A global pandemic, wars in Europe and the Middle East, regional conflicts, increased great power rivalry, and domestic political polarisation have intensified tensions. We now have bifurcated supply chains, the rewiring of globalisation, and ensuing strains in the global and investment framework.

Our views on these developments in the global economy help to guide Temasek’s investment stance and our overall deployment pace. We also recognise that there has been a renewed and urgent focus on national security (encompassing economic security and competition), resiliency including energy and commodity sufficiency, data ownership, techno-nationalism in sectors such as biotechnology, and the use of subsidies, to name a few pressing issues. The presumptive gains from the globalisation of trade, investment, and technology are subject to ever-greater scrutiny and scepticism, with the traditional principles-based discourse being replaced with the assertion of economic and national self-interest.

To stay ahead of these developments, our International Policy and Governance teams — located in Beijing, Brussels, Singapore, and Washington, DC — actively monitor geopolitical risks and anticipate policy developments in our key markets that could impact our activities.

Through our engagement with thought leaders and authorities, we exchange views so as to promote better outcomes for all in the design and implementation of policy. In particular, we aim to promote a better understanding of how we operate based on commercial principles, and independent of government interference and support. For example, we had supported the International Monetary Fund initiative to frame the Santiago Principles for sovereign investments back in 2008. We advocate good governance and uphold these principles.