KIC heavily relies on foreigners for alternative investments

Korea Investment Corporation (KIC) entrusted most of its money for investments in alternative assets such as real estate and private equity to foreign managers, causing calls for more assignments to local financial companies for such deals.

The world’s 14th-largest sovereign wealth fund allocated $28.1 billion to 137 offshore asset management companies for alternative investments last year, or 99.6% of its $28.3 billion total entrusted funds for such investments, according to Jung Taeho, a lawmaker of South Korea’s main opposition Democratic Party on Thursday.

KIC entrusted only 0.4% of the total to domestic managers.

“The sovereign wealth fund KIC needs to contribute to the development of the local financial industry by entrusting certain parts of alternative investments to Korean managers, which it is aggressively expanding,” Jung said.

ENTRUSTED FUNDS TO FOREIGNERS NEARLY DOUBLE FROM 2019

KIC, which managed a total of $180.3 billion in assets as of end-June, aims to increase alternative assets in its assets under management to 25% by 2025 from 23% last year.

The state-run fund established in 2005 manages funds entrusted by the government and central bank and invests entirely outside South Korea.

KIC started entrusting money to local asset managers for alternative investments in 2019 but the value remained low. On the other hand, the entrustment to foreign asset managers has nearly doubled from $14.9 billion that year.

“We will seek various measures to grow together with the local financial industry,” said a KIC official, adding the fund selected two stock managers and one bond manager in the country last year to increase entrusted funds to domestic firms.

Write to Jihyo Lee at jhlee@hankyung.com
 

Jongwoo Cheon edited this article.