By Nick Hedley
South Korea’s sovereign wealth fund grew its assets under
management by 12% in 2021 and increased allocations towards alternatives, according
to an annual update posted on its website.
The Korea Investment Corporation (KIC) – which manages funds
on behalf of the Korean government, Bank of Korea and other public funds – says
AUM rose to $205 billion by the end of the year, from $183 billion at the end
of 2020.
Established in 2005, the fund has more than doubled in size
since 2015, when AUM stood at $91.8 billion.
In 2021, KIC generated an investment return of 9.13%, thanks
in part to a strong performance from private equity assets. Traditional assets
generated an annual return of 6.75%, down from 14.6% in 2020.
Equities comprise 40.6% of total assets and fixed income
34.9%. Allocations towards alternatives rose to 17.5% at the end of 2021, from
15.3% a year before. Private equity has been a standout performer, with
annualized returns of 11.33%, the fund said.
“Our sophisticated asset allocation strategy responded well
to high market volatility and led to solid investment results last year,” said
KIC CEO Seoungho Jin. “KIC will continue to expand alternative assets to
support sustainable long-term performance.”
According to a report by Investment Magazine, Australia’s
superannuation funds are also looking to private equity to boost returns.
Data from the Australian Prudential
Regulation Authority shows that A$30 billion (US$21.5 billion) flowed into
private equity in 2021.
The nation’s largest fund, AustralianSuper, recently
announced that it will invest A$13 billion into private equity over the next
two years – mainly in the U.S., Investment Magazine reported. It aims to increase
its allocation to private equity from 5% to 7% over that timeframe.