Korea Investment Corporation

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Korea Investment Corporation
Native name
한국투자공사
韓國投資公社
Hanguktujagongsa
Sovereign Wealth Fund
Founded 2005
Headquarters Seoul, Republic of Korea[1]
Area served
Worldwide
Key people
Sung-Soo Eun
(Chief Executive Officer& President)
Seung Je Hong
(Chief Risk and Compliance Officer)
Shinwoo Kang
(Chief Investment Officer)
Sangjoon Kim
(Chief Operation Officer)
Number of employees
139(2013)[2]
Website www.kic.go.kr

Korea Investment Corporation (KIC) (Hangul한국투자공사; Hanja韓國投資公社; RRHanguktujagongsa) 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 US$91.8 billion at the end of 4th quarter 2015.[3][4]

Vision[edit]

To be a top sovereign wealth fund that serves as a cornerstone for the nation’s economic future through increasing national wealth[5]

Mission[edit]

  • Increase national wealth by maximizing risk-adjusted returns
  • Contribute to the development of Korea's financial industry[5]

Governance[edit]

Steering Committee
The Steering Committee deliberates and resolves the following matters (Article 9 of the KIC 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 executive officers; approval of budget and account settlement; evaluation of management performance of KIC; inspection of the business. The Investment Sub-Committee and Risk Management Sub-Committee support the matters related to mid- and long-term investment policies of the Steering Committee. Furthermore, the Budget Deliberation Sub-Committee and the Evaluation & Compensation Sub-Committee deliberate on issues pertaining to the operation of KIC and performance evaluation.

Committee members include six professionals from the private sector and the three official members who are the representatives of institutions that have entrusted assets exceeding a set amount, namely the Minister of Strategy and Finance, the Governor of the Bank of Korea and the CEO of KIC. The six private sector members, who are nominated by the Civil Member Candidate Nomination Committee and appointed by the President of the Republicof Korea, serve two-year terms. The chairman of the Steering Committee is elected from among the civil members.

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.[6]

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]

Investment[edit]

Investment Performance(2015 4Q)

Portfolio AUM(US$bn)
Traditional Assets 79.2
Alternative Assets 11.4
Special investment 1.2
Total 91.8

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.[7] 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
[5]

See also[edit]

References[edit]

  1. ^ "Korea Investment Corporation - SWFI - Sovereign Wealth Fund Institute". Retrieved 2 December 2016. 
  2. ^ "Sorry Page". Retrieved 2 December 2016. 
  3. ^ 업무보고 3Q 2013
  4. ^ "What is Korea Investment Corporation (KIC)? definition and meaning". Retrieved 2 December 2016. 
  5. ^ a b c "한국투자공사". Retrieved 2 December 2016. 
  6. ^ "Korea Investment Corp. has new CEO". 6 December 2013. Retrieved 2 December 2016. 
  7. ^ Dai, Shasha. "View From Korea: Q&A with Wealth Fund Investment Chief Don Lee". Retrieved 2 December 2016. 

External links[edit]