South Korea SWF Eyes Doubling Alts.

Apr 25 2014 | 9:50am ET

South Korea’s sovereign wealth fund plans to double its alternative investments over the next decade, a move that could put up to one-fifth of its money into such funds.

Alternatives currently make up about 10% of the Korea Investment Corp.’s US$72 billion portfolio. But the SWF feels the need to increase it as returns from its other investments slow.

“We’ll have to embrace the lower return expectation from traditional assets and that will continue for a considerable period,” KIC chief investment officer Choo Heung Sik told Bloomberg News. “Considering such an environment, expanding into alternatives is one of the most efficient way to protect yield in the mid-to-longer term.”

Choo’s announcement echoes that of his predecessor, Lee Dong Ik, who stepped down last month, but not before pledging last year to triple the KIC’s alternatives allocation.

I want to help KIC explore some gray areas between the traditional and alternative assets,” Choo told Bloomberg. “As the size of our total assets grow, the pace of growth in alternative assets will be much faster than before.”


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