Korea’s $145b wealth fund shifts towards fixed income assets

Seoul, South Korea. Photo by Emile-Victor Portenart on Unsplash.

South Korea’s $145 billion sovereign wealth fund, burned by the sudden shift to market pessimism late in 2018, plans to add to its allocation of bonds and cut shares globally to protect double-digit returns this year.

Korea Investment Corp., which was founded in 2005 to invest some of the nation’s foreign-exchange reserves offshore, is turning “slightly defensive” Choi Heenam, its chief executive officer, said in an interview with Bloomberg News.

The fund, known as KIC, is echoing a trend among sovereign wealth funds globally, which are shifting toward fixed income as their biggest asset class, marking the end of a five-year trend that favored equities, according to an Invesco report in July. Late cycle concerns — both volatility and the prospect of losses from equities — have pushed sovereigns toward a more defensive position, the report said.

While the risk-on mood has driven global equities to record highs amid recent optimism about the U.S.-China trade war, Korea Investment sees reason to be cautious.

After a 3.7% loss in its overall portfolio last year, the fund generated a return of about 10.3% in the first eight months of 2019, according to a spokesman. Korea Investment, which buys only overseas assets, had $121.6 billion in stocks and bonds as of end-August, and $23.9 billion in alternative investments.

Bloomberg 

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.