KIC's Alternative Asset Investment Ratio Decreases for the First Time in 10 Years Last Year

Office of Ryu Seong-geol, People Power Party
"Investment ratio decreases by 0.3%P again this year"

[Asia Economy Reporter Minji Lee] Last year, the proportion of alternative asset investments by Korea Investment Corporation (KIC) decreased for the first time in 10 years.

According to data submitted by KIC to Ryu Seong-geol, a member of the National Assembly's Planning and Finance Committee from the People Power Party, among KIC's total managed assets of $157.3 billion last year, the amount managed in alternative assets was $24.5 billion (based on net asset value), accounting for 15.6% of the total alternative asset investment ratio. This is a 0.8 percentage point decrease from 16.4% in 2018. As of August this year, the proportion of alternative assets further dropped by 0.3 percentage points to 15.3% compared to last year.

KIC is a sovereign wealth fund that manages and operates assets entrusted by the government, the Bank of Korea, and public funds, and supports overseas investments by domestic financial institutions to generate investment returns.

KIC's asset investments are divided into 'traditional assets' such as stocks and bonds, and 'alternative assets' such as hedge funds, private equity, and real estate. To diversify investment risks and generate long-term, stable returns, KIC plans to gradually expand the proportion of alternative asset investments.

As of August this year, KIC's cumulative annualized return on alternative asset investments was 7.29%, approximately 2.0 percentage points higher than the traditional asset return of 5.25%. Alternative asset investments are evaluated as a means to diversify investment assets and enhance investment returns because they have a complementary nature that differentiates their returns and risks from those of traditional asset groups.

Representative Ryu pointed out, “(President Choi Hee-nam announced shortly after his appointment in March 2018) that the proportion of alternative assets in the overall portfolio would be expanded to 19% by 2020, but now, two and a half years after his appointment, the proportion of alternative assets has rather decreased every year.”

Ryu also said, "The increase in KIC's alternative assets is far below the long-term target, and compared to sovereign wealth funds of major countries overseas, KIC's current asset management is concentrated on traditional asset investments," adding, "It is necessary to continuously increase the proportion of alternative asset investments in asset management."

This content was produced with the assistance of AI translation services.