CHINA Investment Corp, the nation's sovereign wealth fund, reported a 10.6 percent return on overseas investments last year and a cumulative return of 5.02 percent since its inception.

The performance was a big improvement from 2011 when the fund reported a loss of 4.3 percent amid declines of global commodity prices, its worst performance since its inception.

CIC's annual report, published yesterday, shows that net profit surged 60 percent from a year earlier to US$77.4 billion in 2012.

CIC was formed six years ago to manage part of China's foreign exchange reserves of US$3.5 trillion.

Its main responsibility is to diversify reserves away from US treasuries, and make investments in other areas. CIC spent 450 million pounds (US$693 million) last November on a 10 percent stake in the UK's Heathrow Airport, its biggest direct investment in 2012.

Apart from infrastructure, the fund also invested in sectors such as energy, mining and private equity.

The fund, which managed US$575 billion of assets by the end of last year, also holds the government's stakes in China's biggest banks - China Development Bank, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China - through its wholly owned investment company Central Huijin Investment Ltd. CIC pursues domestic and overseas investments separately through subsidiaries CIC International and Central Huijin.

The fund currently manages an overseas investment portfolio of around US$200 billion.
CIC said the relatively good returns in 2012 were due to its timely response to market opportunities, as well as effective risk management.

CIC was founded in September 2007 with a registered capital of US$200 billion.

The company's purchase of shares of US firm Blackstone Group LP in 2008 and the stakes it acquired from investment bank Morgan Stanley in 2010 in the form of convertible bonds both reportedly incurred losses, sparking doubts about its profitability.

Four previous annual reports showed that the wealth fund's annual rate of return stood at -2.1 percent, 11.7 percent, 11.7 percent and -4.3 percent, respectively, in the years from 2008 to 2011.

In 2012, the sovereign fund raised the proportion of open market share purchases, and steadily carried out long-term investments, including investing in the infrastructure, energy and real estate sectors, according to yesterday's report.

By the end of last year, long-term investments and open market stocks respectively accounted for 32.4 percent and 32 percent of CIC's total overseas investments.

Earlier this month, the sovereign wealth fund named Ding Xuedong, former vice finance minister, to become its new chairman.

The announcement came after more than three months of speculation regarding the vacancy.
The fund's former chairman and chief executive officer, Lou Jiwei, had been named China's finance minister during a government reshuffle in March.