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Investment

Investing assets entrusted by the government, Bank of Korea and public funds in the global financial market

Portfolio Highlights

The Korea Investment Corporation (KIC) was entrusted with USD 100 billion following its establishment in 2005, and has a net asset value of USD 134.1 billion as of the end of 2017.

  • Overview

    Following a principle of diversification, we manage a portfolio that comprises 85.6% traditional assets and 14.4% alternative assets, including hedge funds, private equity, real estate and infrastructure.


    With a strategy of gradually expanding our alternative assets, which have a low correlation with traditional assets and can capture illiquid risk premiums that tend to pursue relatively higher returns, we increased the proportion of alternative investments in our portfolio from 13.7% at the end of 2016 to 14.4% in 2017.


    KIC’s return on total assets in 2017 reached 16.42%, with the annualized return for the past five years being 5.99%. We have expanded our investment competencies based on principles of long-term investing and diversification since our establishment and recorded an annualized return since inception of 4.45% despite the global financial crisis and low interest rates.


    Thanks to the strong performance of equities markets in developed and emerging markets as well as stable interest rate patterns in global fixed-income markets in 2017, the MSCI All Country World Index (equities) soared by 23.97%, and the Barclays Capital Global Aggregate Index (fixed income) rose by 7.39%. The S&P GSCI Light Energy Total Return Index increased by 5.15%, as associated assets reported mixed performance.

  • Asset allocation (2017)

    (USD billion, %)

    Asset allocation (2017)
    Category NAV Asset allocation**
    Total 134.1 100.0
    Traditional assets Equities 55.5 41.4
    Fixed income 45.6 34.0
    Other* 13.7 10.2
    Subtotal 114.8 85.6
    Alternative assets Hedge funds 4.7 3.5
    Private equity 6.5 4.9
    Real estate and infrastructure 7.8 5.8
    Cash equivalent 0.3 0.2
    Subtotal 19.3 14.4
    • * “Other” refers to inflation-linked bonds, commodities, cash, etc.
    • ** NAV basis
  • Asset allocation comparison by year

    (%)

    Asset allocation comparison by year
    Category 2016 2017
    Total 100.0 100.0
    Equities 41.2 41.4
    Fixed income 33.0 34.0
    Alternative assets 13.7 14.4
    Special investment 1.4 -
    Other 10.7 10.2
  • Assets under management by year

    (USD billion)

    Assets under management by year
    2013 2014 2015 2016 2017
    Cumulative investment* 66.6 82.0 94.7 106.8 115.8
    NAV 72.0 84.7 91.8 110.8 134.1
    Accumulated gains 12.0 14.7 11.8 15.8 34.1
    • * Sum of NAV and annual investment amount.
  • Return on total assets

    KIC’s return on total assets in 2017 stood at 16.42%, with a five-year annualized return of 5.99% and annualized returns since inception of 4.45%.


    • 2013 9.09 %
    • 2014 4.02 %
    • 2015 -3.00 %
    • 2016 4.35 %
    • 2017 16.42 %
  • Return on traditional aseets

    The return on traditional aseets in 2017 is 16.71%, 129bps higher than the benchmark.

    (%, bp)

    Return on traditional aseets
    Category 2013 2014 2015 2016 2017 Annualized return for the past five years Annualized return since inception
    Total Return 8.67 3.52 -3.15 3.96 16.71 5.74 4.95
    Excess return 108 131 68 -95 129 67 26
    Equities Return 18.61 4.82 -1.82 5.85 25.50 10.15 4.07
    Excess return 102 112 153 -232 122 51 -9
    Fixed income Return -1.63 2.73 -3.57 1.46 8.00 1.32 4.14
    Excess return 2 128 5 29 72 46 29
  • Return on alternative assets

    Annualized return since inception is 7.37%

    • Hedge funds
      • Inception : Jan. 29, 2010
      • Annualized return since inception : 5.65 %
    • Private equity
      • Inception : Sept. 16, 2009
      • Annualized return since inception : 7.11 %
    • Real estate, infrastructure
      • Inception : March 15, 2010
      • Annualized return since inception : 8.07 %
    • Alternative asset total *
      • Annualized return since inception : 7.37 %

    * Total includes commodities (categorized as traditional assets since April 2011)

  • Return on special investment

    KIC fully divested from its special investment (Bank of America Merrill Lynch) in 2017. The final return was 0.38%.

    (USD billion, %)


    Return on special investment
    Investment start date Initial amount invested Recovered amount Accumulated gains Annual return on investment*
    Feb. 1, 2008 2.0 2.1 0.1 0.38

    * IRR basis

  • Benchmark for each asset class
    Benchmark for each asset class
    Asset class Benchmark
    Equities Morgan Stanley Capital International All Country World Index ex Korea (unhedged)
    Fixed income Barclays Capital Global Aggregate Index ex KRW ex Korea (unhedged)
    Commodities S&P GSCI Light Energy Total Return Commodity Index
    Inflation-linked bonds Barclays Capital Global Inflation-linked Bond Index
    Cash BofA Merrill Lynch 3-Month US Treasury Bill
    Private equity Morgan Stanley Capital International All Country World Index ex Korea (unhedged) + 2%, 3 months lagged
    Real estate and infrastructure G7 inflation rate + 4%, 3 months lagged
    Hedge funds BofA Merrill Lynch 3-Month US Treasury Bill + 3.5%, 1 month lagged
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