GIC Chairman Lee Kuan Yew dismissed talk that Ho Ching -- his daughter-in-law, who heads Temasek -- may move to the GIC, a rumour that's circulated in Singapore's financial markets for weeks.

"Temasek will take higher risk for higher returns. GIC is more a pension fund," Lee told Reuters in an interview on Tuesday.

"We (the GIC) model ourselves on the US college funds, we study what the Yale fund does."

The GIC, which manages over US$100 billion in foreign reserves, invests in real estate, equities, currencies and other asset classes. Last year, it said its annual return has averaged 8.2 percent in Singapore dollar terms in the 25 years to March 2006.

The GIC has said that it wants to increase its exposure to emerging markets, private equity and hedge funds because these provide opportunities for higher returns.

Temasek's portfolio, which includes stakes in big Singapore firms such as Singapore Telecommunications and DBS Group Holdings , was worth S$129 billion at the end of March 2006.

Ho, who is married to Prime Minister Lee Hsien Loong, joined Temasek in May 2002, driving its expansion abroad with the acquisition of stakes in Chinese banks and its ill-starred deal with Thailand's Shin Corp.

The state investor, which is owned by the Ministry of Finance, said last year that its total shareholder return by market value over the past 30 years was 18 percent a year.

However, in the past year, its performance would have been hit by its $3.8 billion investment in Shin Corp which it bought from Thailand's former prime minister, Thaksin Shinawatra, and his family, and which has halved in value.

The deal sparked a political crisis in Thailand and has led to a souring of relations between the two countries.
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