Korea Investment Corporation

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Korea Investment Corporation(KIC) was established in 2005 to preserve and enhance the long-term purchasing power of South Korea's sovereign wealth through efficient management of public funds in the international financial markets. KIC manages assets entrusted by the Government, the Bank of Korea, and other public funds as defined under the National Finance Act. KIC directly invests the entrusted assets or re-entrusts the assets to external managers. KIC's Total assets under management stood at USD 64.5 billion at the end of 3rd quarter 2013.[1][2]

Korea Investment Corporation
Type Sovereign Wealth Fund
Founded 2005
Headquarters Seoul, Republic of Korea[3]
Area served Worldwide
Key people Hongchul Hank Ahn
(Chief Executive Officer& President)
Taegki Hong
(Chief Risk and Compliance Officer)
Heungsik Choo
(Chief Investment Officer)
Young Kim
(Chief Operation Officer)
Employees 139(2013)[4]
Website www.kic.go.kr

Vision[edit]

To be the premier sovereign wealth fund for future generations[5]

Mission[edit]

  • Increase national wealth by maximizing risk-adjusted returns
  • Contribute to the development of Korea's financial industry[6]

Governance[edit]

Steering Committee
KIC has adopted a governance structure with the Steering Committee as the highest governing body, which makes the best use of professional expertise from the private sector. The Steering Committee oversees the basic policy and direction of KIC, and has the authority to deliberate and resolve the following matters(Article 9 of the Korea Investment Corporation Act), including; mid and long term investment policies; modification of financial status, such as the increase or decrease of capital ;entrustment of assets to KIC ;appointment and dismissal of the officers ;approval of budget and account settlement ;evaluation of management performance of KIC ;and the inspection of the business.

Board of Directors
KIC maintains a Board of Directors which includes CEO and directors. The Board resolves important issues to be referred to the Steering Committee; use of emergency funds and carrying forward of the budget; matters pertaining to the adoption, amendment to and repeal of internal regulations of KIC; and any other matters of the Board deems necessary.

Chief Executive Officer(CEO)
CEO of KIC is appointed by the President of the Republic of Korea upon recommendation by the Minister of Strategy and Finance through the President Recommendation Committee, and deliberation by the Steering Committee. The CEO represents KIC and presides over its business, and convenes the meetings of the Board of Directors and serves as the chairman of such meetings.[7]

Statutory Auditor
In accordance with the Korea Investment Corporation Act, KIC has an independent audit function separate from the management. The full-time Statutory Auditor is appointed by the Minister of Strategy and Finance through deliberation by the Steering Committee. Its role and responsibilities are to audit business and accounting activities at KIC.

Directors
Directors are appointed and dismissed by the CEO following deliberation by the Steering Committee. Appointed directors serve three year terms.

Organization Chart[edit]

Korea Investment Corporation

Investment[edit]

Investment Performance(2013 3Q)

Portfolio AUM(US$bn)
Traditional Assets 65.07
Alternative Assets 5.77
Total 72.00


Traditional Investments
The traditional asset portfolio pursues stable risk-adjusted returns by investing in publicly traded securities, mostly stocks and bonds.

The global financial crisis of 2008, the U.S. credit rating downgrade in 2011, and the fiscal crisis in Europe temporarily dampened returns on traditional assets. Nevertheless, the traditional asset portfolio delivered a return of 11.83% in 2012, outperforming the benchmark by 66bp, amid global policy collaboration to revive the world economy. The cumulative return over the past five years is 3.72%(annualized ), which is 3bp higher than the benchmark.

Alternative Investments
Alternative investments have a different risk/return profile compared with traditional asset classes. KIC invests in alternative assets as a way of complementing investment in traditional assets. Alternative investments usually comprise assets that have low liquidity and are based on private contracts.[8] KIC began investing in private equity and real estate/infrastructure in 2009, and expanded the scope of investment to hedge funds in early 2010. In 2012, KIC expended and diversified investment in alternative assets to pursue consistent and stable returns.

Special Investments
KIC has been allocating assets to a wide range of sectors since launching special investments in 2010. KIC maintains appropriate risk management and monitoring systems to ensure stability of the special investment portfolio. Special investments are managed internally rather than outsourced and also pursued in partnership with other sovereign wealth funds and prominent global pension funds.

Milestones[edit]

  • Year 2005

MAR 2005:Promulgation of Korea Investment Corporation Act
JUL 2005:Establishment of Korea Investment Corporation

  • Year 2006

JUN 2006:Signing of investment management agreement with the Bank of Korea
OCT 2006:Signing of investment management agreement with the Ministry of Strategy and Finance

  • Year 2007

APR 2007:Launch of global equity investment
AUG 2007:Launch of In-house global fixed income investment

  • Year 2008

MAR 2008:Launch of In-house global equity investment

  • Year 2009

MAR 2009:Expansion of Risk Management team
AUG 2009:Launch of alternative investment team

  • Year 2010

MAR 2010:Formation of Special Investment Team
JUL 2010:Opening of New York Office

  • Year 2011

DEC 2011:Opening of London Office
DEC 2011:Adoption of the Long-term growth strategy 'Vision 2020'

  • Year 2012

SEP 2012:Launch of Direct investment in mainland China
[9]

See also[edit]

References[edit]

  1. ^ 업무보고 3Q 2013
  2. ^ Investor Words Korea Investment Corporation
  3. ^ SWF Institute Korea Investment Corporation
  4. ^ ALIO ALI Public Information in One
  5. ^ Korea Investment Corporation Homepage
  6. ^ Korea Investment Corporation Homepage
  7. ^ Korea Investment Corp. has new CEO
  8. ^ Wall Street Journal View From Korea: Q&A with Wealth Fund Investment Chief Don Lee
  9. ^ Korea Investment Corporation Homepage

External links[edit]