"Global Expansionary Monetary Policy... Real Assets Expected to Remain Strong"

Interview with Lee Gyu-hong, Director of Fund Management at the Private School Teachers' Pension Service

Lee Gyu-hong, Director of Fund Management at the Private School Teachers' Pension Service (Sahak Yeongeum)

"Not Riding Short-Term Market Trends"

"Faithful to Mid- to Long-Term Asset Allocation Strategy"

Last Year's Operating Profit of 2.1411 Trillion KRW

Highest Record Since Establishment

[Asia Economy Reporter Park Soyeon] On the 3rd, Lee Kyuhong, Head of Fund Management at the Private School Teachers' Pension Service (Sahakyeongeum), said in an interview with Asia Economy, "The strong performance of real asset prices, including stocks and commodities, is expected to continue." This outlook is based on the global economic recovery following the distribution of COVID-19 vaccines and the expectation that major global countries will continue expansionary monetary policies.

Lee Kyuhong identified the key themes for this year's global financial markets as "global economic recovery and normalization" and "valuation pressure on asset prices." He stated, "The U.S. Federal Reserve has introduced the 'Average Inflation Target' to tolerate inflation beyond the appropriate level to stimulate the economy, and major global countries are expected to continue expansionary monetary policies." He added, "Real asset prices have already reflected a significant part of the global economic recovery, resulting in increased valuation pressure." He also noted, "In the stock market, valuation indicators such as PER (Price-to-Earnings Ratio) have already reached historically high levels, but stocks remain relatively undervalued compared to bonds."

Lee pointed out, "The biggest risk factor in this year's financial markets is the rise in market interest rates due to increased inflationary pressure." However, he added, "Considering the clear message from the U.S. Federal Reserve that it will tolerate inflation beyond the appropriate level to prioritize economic recovery, and the relatively low inflation concerns in regions outside the U.S., such as Europe and Japan, the likelihood of a change in the U.S.'s expansionary monetary policy stance this year appears low."

Last year, Sahakyeongeum achieved an 11.49% return, marking two consecutive years of double-digit returns. The operating profit for last year alone reached 2.1411 trillion KRW, the highest since its establishment. Total managed assets increased to 20.9128 trillion KRW. Lee Kyuhong, who has been in charge of fund management since September two years ago, attributed the high returns to "investment faithful to the basics." He explained, "Rather than overreacting to short-term market issues, long-term investment that faithfully follows a strategically established mid- to long-term asset allocation plan ultimately yields the highest returns."

Despite the sharp decline in the global stock market due to COVID-19 last year, Lee adhered to investment principles. When the stock holding ratio fell significantly below the mid- to long-term strategic asset allocation target due to the market plunge, he purchased stocks to approach the asset allocation ratio despite recession forecasts and pessimism in financial markets. After the global stock market recovered and the stock holding ratio exceeded the target allocation, he realized profits on some stocks.

Lee explained, "The major trend in future asset allocation will be to gradually reduce bond investments reflecting the low-interest-rate environment, while continuously increasing the proportion of alternative investments that have low correlation with the returns of traditional assets (stocks and bonds), thereby maintaining expected returns while reducing volatility." He also revealed, "Last year, we significantly increased the investment proportion in socially responsible investment (SRI) funds among domestic stock delegated management types, and we plan to increase it further this year. In the first quarter of this year, we invested 120 billion KRW in ESG bonds such as green bonds, and in addition, we plan to continue expanding investments in alternative sectors such as electric vehicles and renewable energy."

Meanwhile, Lee Kyuhong graduated from Yonsei University with a degree in Business Administration and completed graduate studies in Business Administration at New York University. He has held positions including researcher at CLSA Securities, team leader at Dongbu Asset Management Research Center, Chief Investment Officer (CIO) at Eastspring Asset Management, CIO at NH-CA Asset Management, and CEO of Ascendas Asset Management.

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