Korea Investment Corporation (KIC)

What Is the Korea Investment Corporation (KIC)?

The Korea Investment Corporation (KIC) is a government-owned investment organization that deals with the sovereign wealth fund (SWF) for the Government of South Korea. The KIC was laid out by law in 2005 and funded in 2006. The KIC received initial deposits of $17 billion from the Bank of Korea and $3 billion from the Korean Ministry of Strategy and Finance.

The KIC has around USD$183.1 billion in assets under management as of the finish of 2020 and positions fifteenth in size among sovereign wealth funds as per the Sovereign Wealth Fund Institute's rankings.

Grasping the Korea Investment Corporation (KIC)

The KIC is restricted to investing just in assets that fall under the rules given by the Korea Investment Corporation Act. The KIC likewise is engaged with dealing with the nation's currency and however stays a separate entity from its currency reserves.

The KIC's objectives are to upgrade Korea's sovereign wealth and to add to the development of the Korean financial industry. The KIC is represented by a directing committee comprising of nine individuals plus the chair.

The fund currently has a "sustainable growth vision" with a target date of the year 2035. This incorporates expanding exposure to sustainable and socially responsible investments.

KIC Investments

The KIC deals with a portfolio comprised of 85% traditional assets (e.g., stocks, bonds, and money instruments) and 15% alternative assets, including private equity, real estate, infrastructure tasks, and hedge funds. As part of expanding its portfolio diversification, the KIC increased its exposure to emerging markets starting around 2010. KIC's return on total assets in 2020 remained at 13.7%, with a five-year annualized return of 9% and annualized returns since beginning of 5.22%.

As to investment philosophy, that's what it states "KIC endeavors to increase returns while (1) limiting the risks from individual markets and assets through portfolio diversification; and (2) exercising flexibility to jump all over investment chances." KIC seeks after benchmark returns (beta) by expanding investments in the scope of currencies and countries, as illustrated in its investment management rules. KIC additionally endeavors to create excess returns over the benchmarks (alpha) through active management inside a suitable level of risk.

Choices connected with strategic asset allocation are subject to evaluation by a guiding committee. As to assets, the fund oversees risk utilizing the ex-ante tracking error from active investing relative to the benchmark. Assuming the weighting of an asset class digresses from a set reach compared to the benchmark, changes are made so exposure falls inside the set reach. The portfolio is rebalanced at pre-decided times to keep up with policy weightings for every asset class.

Any agreements endorsed among KIC and third-party portfolio managers will determine accessible asset classes and benchmark targets, and these act as the basis for risk management and performance evaluation.

Features

• The Korea Investment Fund (KIC) is the sovereign wealth fund for the nation of South Korea.
• The KIC has the initiative to increase its allocation to sustainable investments by 2035.
• The fund was laid out in 2005 and has become among the main 15 biggest sovereign wealth funds in the world.