He also said that the exposure to AI is a natural extension to the digitisation trend that Temasek has been investing in.

Technology, media and telecommunications makes up about 25 per cent of the portfolio, and the 15 per cent of AI exposure will be a part of that, he said.

Overall, the company believes this amount of exposure to AI is manageable, and that it can ride through market volatility, he said.

“It is very hard to time and very hard to manage this short-term volatility. We just need to make sure that we have the ability to deal with the change in market direction from time to time,” he said.

Some AI companies that Temasek has a stake in have also gone public or are planning to, added Mr Chia.

“We expect in a year or two, this portfolio will be highly liquid rather than highly private … so hopefully that will help us address some of the concerns,” he said.

FOCUS ON INFRASTRUCTURE, PRIVATE CREDIT

Besides AI, Temasek also set targets to grow its exposure to core-plus infrastructure and private credit.

For core-plus infrastructure, related assets now make up 1 per cent of the portfolio. Temasek hopes to increase that to up to 5 per cent by Mar 31, 2031.

Core-plus infrastructure refers to investments in energy-transition assets and digital infrastructure such as data centres. These have typically slightly higher returns than traditional infrastructure projects such as rail networks or gas pipes, Temasek said.

“We see compelling opportunities in ageing infrastructure and grid modernisation, renewable and nuclear energy, energy storage, and breakthrough decarbonisation technologies,” the company said.

For private credit, Temasek wants to grow its exposure from 2 per cent to 5 per cent by Mar 31, 2031.

From a portfolio construction perspective, private credit is valuable because it provides good returns, balances growth opportunities like AI and does well in a high inflation environment, said Mr Rohit Sipahimalani, chief investment officer of Temasek International.

Despite concerns about defaults surrounding private credit, it remains an important asset class, said Mr Gabriel Lim, executive director and chief executive officer of Seviora Holdings, an investment company wholly owned by Temasek.

He said it’s important to consider factors such as how the deals are structured and the quality of the collateral.

Pointing to a private credit fund by SeaTown, which is owned by Seviora, Mr Lim said: “We have good governance, we have good collateral.”

The fund is performing well and can be scaled up, but in a disciplined, careful manner, he added.