"Military Mutual Aid Association to Increase Investments in Developed Countries"

Lee Sang-hee, CIO of the Military Mutual Aid Association

Annual Overseas Investment Expansion of 3-5%

Forecasting Record-Breaking Performance This Year

Five Consecutive Years of Profit through Risk Management

[Asia Economy Reporters Lim Jeong-su, Park So-yeon] "We plan to increase the proportion of overseas investments by about 3-5% annually and diversify our investment portfolio by asset type and region."

Lee Sang-hee, Director (CIO) of the Financial Investment Division at the Military Mutual Aid Association, recently met with Asia Economy at the association's office in Gangnam-gu, Seoul, stating, "The pension fund of the association finds the domestic market too narrow to invest only in Korea," adding, "Although the domestic proportion is currently high, we intend to continuously increase our overseas allocation."

As of 2021, the Military Mutual Aid Association invests 37% of its total managed assets of approximately 9 trillion KRW overseas. The asset allocation is approximately 6% domestic stocks, 5% overseas stocks, 10% domestic bonds, 6% overseas bonds, 17% domestic alternative investments, 17% overseas alternative investments, 30% domestic real estate, and 9% overseas real estate.

CIO Lee said, "We plan to increase the proportion of investments in developed countries among our overseas investments," and added, "We will raise the share of alternative investments such as data centers, logistics centers, and multi-family housing." Even if expected returns are somewhat lower, the plan is to expand investments mainly in developed regions like North America and Europe, which carry lower risks. In the mid to long term, the association intends to broaden its investment scope into ESG (Environmental, Social, and Governance)-based sectors such as eco-friendly industries, future mobility, and biotechnology.

The Military Mutual Aid Association recorded a net income of 175.5 billion KRW in the first half of this year alone, forecasting a record-high performance. CIO Lee stated, "This year's results are the best ever," noting, "The stock market performed well, and the assets we invested in previously continue to deliver strong results." He added, "The investment process itself is tightly filtered, which has reduced defaults." Last year, the association also posted its highest performance since the financial crisis, with a net income of 150.3 billion KRW, marking five consecutive years of profitability.

CIO Lee explained, "When the business departments review investments, the Risk Management Office and Legal Office conduct detailed risk assessments," and said, "External experts participate in the Investment Review Committee, which operates by 100% anonymous voting, and final investment decisions are made after deliberation by the board of directors." He analyzed, "Since the system was established in 2013, there has not been a single loss-making project, and the thorough business management system is the reason we have achieved five consecutive years of profit."

Regarding the economic outlook for next year, he said, "Although supply chain issues caused by COVID-19 and inflation concerns exist, I do not expect these to persist long-term," adding, "Rather, the focus will be on corporate earnings improvements, which will lead the market." He hinted, "Starting next year, we also plan to actively engage in necessary investment activities such as on-site due diligence."

CIO Lee served at Samsung Life Insurance for about 25 years from 1989 to 2014, holding positions such as Head of Strategic Investment, Head of Equity Investment, and Head of New York Investment Corporation. Afterward, from 2014 until last year, he worked as Senior Executive Director of Asset Management at Lotte Insurance before being appointed CIO of the Military Mutual Aid Association in May of this year.

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