the trap of data - mined quantitative strategies that rely on factors that may not be robust through time. conclusion in singapore, reserve management is a multi - objective, multi - agency, and most importantly, a multi - generational effort. the reserves serve as a buffer against bad times, as an endowment to finance current needs, and as a foundation for macroeconomic stability. as custodians of the national reserves, mas, gic, and temasek owe a duty of care and responsibility to the ultimate beneficiaries of the reserves - current and future generations of singaporeans. it is a duty that motivates our investment and risk managers as they go about their work 6 / 7 bis central bankers'speeches each day, trying to extract value while staying clear of pitfalls, amidst the turbulence, tides and ebbs of financial markets. thank you. 7 / 7 bis central bankers'speeches

efficient investment process mas strives to achieve an efficient investment process, underpinned by two elements : one, judicious benchmark selection and customisation ; and two, tapping on specialised external investment expertise first, benchmark selection. mas uses asset class benchmarks to represent the investment universe and risk profile of each asset class that can be easily replicated, to evaluate its investment performance. these benchmarks could be market - capitalisation weighted or customised. for some asset classes, we have chosen to apply certain customisations to marketcapitalisation weighted benchmarks, guided by considerations of liquidity, stability, and concentration risk. 5 / 7 bis central bankers'speeches one area we have applied customisation is in the fixed income asset class, where it is relatively more important to guard against concentration risk. this is because the response to credit risk is more asymmetric for fixed income than for equities. there is limited upside for credit improvement but large downside from the threat of default. we have therefore limited our exposure to some large government bond markets, taking into account the default risk of these bonds. another area where we have customised our benchmark is with respect to renminbi ( rmb ) assets, in particular chinese government bonds. here, the consideration was not to limit exposure but to gain exposure ahead of market benchmark inclusion as markets develop. mas started investing in rmb assets in 2012, fully expecting market indices to catch up at some point. indeed, recent announcements by major index providers to include or accelerate the schedule of inclusion for rmb assets in their indices reflect this trend. next, tapping on relevant investment expertise. part of the mas portfolio is managed by reputable external fund managers. these investment managers are hired for their deep investment expertise and specialised knowledge in particular investment fields. for instance, factor - based investing is an area that we are watching closely. institutional investors are starting to look beyond asset classes to view returns via a “ factor lens ”. there are two applications of this approach, return enhancement and portfolio analysis. looking through asset class labels to underlying risk factor exposures can enhance understanding of return sources. flipping them around, they also help to enhance understanding of risk drivers. in fact, the vulnerability - based stress tests that i described earlier is an application of this factor approach. this can help investors to create more efficient and diversified portfolios, compared to a traditional asset class - driven approach. but we are also mindful not to fall into