이 기사는 2020년 02월 10일 08:00 thebell 에 표출된 기사입니다.

Korea Investment Corporation (KIC), the fourteenth-largest sovereign wealth fund in the world by assets under management, plans to open an office in the western U.S. in a bid to gain a foothold in alternative investments.

KIC posted a return on investments of 15.39 percent for 2019, an improvement from a negative return on investments of -3.66 percent for the previous year, the sovereign wealth fund said at a press conference on February 6. The average annual return for the past five-year period was at 5.55 percent, meeting the goal of about 5 percent.

The fund, with around $157.3 billion under management as of the end of 2019, revealed a plan to increase its allocation to alternative investments to 20 percent in the coming years as part of efforts to further diversify its portfolio.

At the end of 2019, KIC has nearly $133 billion worth of traditional investments, including equities and bonds, representing some 84 percent of its total assets under management. Meanwhile, its allocations to alternatives – such as hedge funds and real estate – stand at only 15.6 percent, or worth $24.5 billion.

Choi Hee-nam, CEO of KIC, said in a press conference that the fund plans to open an office in San Francisco during the third quarter of this year, with an aim to strengthen its relationship with key global players and have more access to alternative investment opportunities. KIC currently operates three overseas offices in New York, London and Singapore.

“We have learned by experience that building up a network [of global partners] is very important for overseas investments,” said Choi, adding that he is aiming to enter the “inner circle” there to source new investment opportunities.

KIC reported a return of 16.62 percent on its allocation to traditional investments for 2019. This brought the average annual 5-year return for the asset classes to 5.27 percent, outperforming the fund’s benchmark.

Meanwhile, for the same year, the fund posted a return of 9.02 percent on its alternative holdings. KIC started to allocate to alternative asset classes in around 2010. By asset type, the aggregate return on real estate and infrastructure assets is 8.05 percent for the last ten years, while aggregate returns on hedge funds and private equity are 5.28 percent and 8.09 percent, respectively.

“For the allocation to alternative assets, we have reviewed real estate and infrastructure investment proposals from large global private equity firms,” said Park Dae-yang, CIO of KIC, who took the role last August.

KIC was entrusted with a total of $108.1 billion as of the end of 2019, among which $78.1 billion, or 72 percent, came from the Ministry of Economy and Finance (MOEF) and the remaining $30 billion from the Bank of Korea.

“Only part of the assets entrusted by the Ministry of Economy and Finance can be used to allocate to alternative investments,” a KIC official said, but added that, with the launch of its new office in San Francisco as a momentum, the fund will accelerate efforts to enhance the long-term returns by using market-specific strategies.

(By reporter Rho Ar-rum)