KIC Achieves 11.6% Return in 2023 with Asset Management Increasing by 26 Trillion Won

Traditional assets such as stocks (22.4%) drive performance
Total assets under management $189.4 billion
Annual return of 13.5% when converted to KRW

The sovereign wealth fund Korea Investment Corporation (KIC) recorded double-digit returns last year, increasing its total assets under management by more than $20 billion.

KIC announced on the 5th that its annual return in US dollars last year was 11.6%. The annual return in Korean won was calculated at 13.5%.

As of the end of 2023, total assets under management (AUM) amounted to $189.4 billion (approximately 244 trillion KRW). Compared to the previous year ($169.3 billion), this represents an increase of $20.1 billion (about 26 trillion KRW). Since its establishment in 2005, KIC’s cumulative investment returns have reached $77.9 billion (approximately 100 trillion KRW).

KIC’s traditional asset (stocks, bonds, etc.) returns last year were 14.3%. Stock returns were 22.4%, while bond returns were 6.3%.

Last year, global stock markets rebounded as expectations for a soft economic landing increased due to strong consumption in major countries including the US, and investments in information technology (IT) and communication services centered on AI expanded. KIC also achieved favorable returns in stocks through investments focused on technology stocks and developed markets such as the US, Europe, and Japan.

In the bond market, the US 10-year Treasury yield showed high volatility, rising from 3.3% to 5% during the year before falling back to 3.8%. KIC achieved stable returns by anticipating a recovery in bond demand amid expectations of price stability and a downward stabilization of interest rates.

As of the end of last year, KIC invested 78% of its total assets in traditional assets and 22% in alternative assets. Within traditional assets, the breakdown by asset class is 39.2% stocks, 31.5% bonds, and 7.3% others (inflation-linked bonds, cash, etc.).

Alternative assets (private equity, real estate & infrastructure, hedge funds, etc.) have delivered solid long-term investment performance despite a liquidity contraction environment. The recent 5-year (2019?2023) annualized return for alternative assets was 8.6%.

Since starting alternative asset investments during the 2009 global financial crisis, the cumulative annualized return through the end of 2023 is 7.8%.

The 5-year annualized returns by individual alternative asset classes are 13.5% for private equity, 5.5% for real estate and infrastructure, and 5.7% for hedge funds.

Amid increasing market volatility, KIC is focusing investments on asset classes with low macroeconomic sensitivity and expected long-term structural growth driven by technological innovation and industrial changes.

In particular, KIC is gradually expanding its allocation to private debt, where investment opportunities are expected to increase due to rising loan interest rates, and infrastructure, which is expected to benefit from medium- to long-term energy transition and digitalization.

Additionally, KIC plans to actively explore emerging market investments by utilizing its Mumbai office in India, which opens this year.

President Jin Seung-ho said, “Last year was a very challenging year for market forecasting due to rapid changes in economic conditions and shortened financial market cycles, but we were able to achieve favorable returns based on in-depth research and agile responses to market changes.”

He added, “This year, elections will be held in about 50 countries including the US, and it is expected to be a year of accelerated technological innovation such as AI. We will closely monitor changes in geopolitical conditions to capture investment opportunities and expand investments in future-oriented industries such as AI, semiconductors, and healthcare.”

Meanwhile, KIC is South Korea’s only sovereign wealth fund and invests all foreign currency entrusted by the government and the Bank of Korea overseas. Accordingly, its official returns are based on US dollars, with returns converted to Korean won calculated for reference purposes.

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