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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 was entrusted with USD 102.6 billion following its establishment in 2005, and has a net asset value of USD 131.6 billion as of the end of 2018.

  • Overview

    Following a principle of diversification, we manage a portfolio that comprises 83.6% traditional assets and 16.4% 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 14.4% at the end of 2017 to 16.4% in 2018.


    Due to a challenging investment environment in 2018 in which prices for equities, bonds, commodities and other assets fell simultaneously, KIC recorded a return on total assets of -3.66%, down from the 16.42% return on total assets in 2017. Since our establishment, we have been expanding our investment competencies based on a principle of long-term, diversified investing. Despite the global financial crisis and low interest rates, we achieved an annualized return of 3.38% over the past five years and an annualized return since inception of 3.76%.


    Challenges in the global financial market last year included tight monetary policy enacted by the U.S. Federal Reserve, trade conflicts between major economies and worries about slowed global economic growth. As a result, the MSCI All Country World Index (equities) declined by 9.41% and the Bloomberg Barclays Capital Global Aggregate Index (bonds) fell by 1.20%. In the commodities market, the prices of most assets fell due to the expected drop in demand caused by the global economic slump. As a result, the Dow Jones Commodity Index fell by 8.91%.

  • Asset allocation (2018)

    (USD billion, %)

    Asset allocation (2018)
    Category NAV Asset allocation**
    Total 131.6 100.0
    Traditional assets Equities 46.4 35.3
    Fixed income 48.3 36.7
    Other* 15.3 11.6
    Subtotal 110.0 83.6
    Alternative assets Hedge funds 4.7 3.6
    Private equity 7.6 5.8
    Real estate · infrastructure 8.8 6.7
    Cash equivalent 0.5 0.4
    Subtotal 21.6 16.4
    • * “Other” refers to inflation-linked bonds, commodities, cash, etc.
    • ** NAV basis
  • Asset allocation comparison by year

    (%)

    Asset allocation comparison by year
    Category 2017 2018
    Total 100.0 100.0
    Equities 41.4 35.3
    Fixed income 34.0 36.7
    Alternative assets 14.4 16.4
    Other 10.2 11.6
  • Assets under management by year

    (USD billion)

    Assets under management by year
    2014 2015 2016 2017 2018
    Cumulative investment* 82.0 94.7 106.8 115.8 136.7
    NAV 84.7 91.8 110.8 134.1 131.6
    Accumulated gains 14.7 11.8 15.8 34.1 29.0
    • * Sum of NAV and annual investment amount.
  • Return on total assets

    KIC’s return on total assets in 2018 stood at -3.66%, with a five-year annualized return of 3.38% and an annualized return since inception of 3.76%.


    • 2014 4.02 %
    • 2015 -3.00 %
    • 2016 4.35 %
    • 2017 16.42 %
    • 2018 -3.66 %
  • Return on traditional aseets

    The return on traditional assets in 2018 was -5.64%, -81 bps compared to the benchmark.

    (%, bp)

    Return on traditional aseets
    Category 2014 2015 2016 2017 2018 Annualized return for the past five years Annualized return since inception
    Total Return 3.52 -3.15 3.96 16.71 -5.64 2.79 4.04
    Excess return 131 68 -95 129 -81 27 17
    Equities Return 4.82 -1.82 5.85 25.50 -9.55 4.34 2.83
    Excess return 112 153 -232 122 -71 14 -15
    Fixed income Return 2.73 -3.57 1.46 8.00 -1.32 1.39 3.68
    Excess return 128 5 29 72 -13 43 26
  • Return on alternative assets

    Annualized return since inception: 7.40%

    • Hedge funds
      • Inception : Jan. 29, 2010
      • Annualized return since inception : 5.26 %
    • Private equity
      • Inception : Sept. 16, 2009
      • Annualized return since inception : 7.50 %
    • Real estate · infrastructure
      • Inception : March 15, 2010
      • Annualized return since inception : 8.16 %
    • Alternative asset total *
      • Annualized return since inception : 7.40 %

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

  • 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 Bloomberg Barclays Global Aggregate Index ex KRW ex Korea (unhedged)
    Commodities S&P GSCI Light Energy Total Return Commodity Index
    Inflation-linked bonds Bloomberg Barclays Global Inflation-linked Bond Index
    Cash ICE 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 · infrastructure G7 inflation rate + 4%, 3 months lagged
    Hedge funds BofA Merrill Lynch 3-Month U.S. Treasury Bill + 3.5%, 1 month lagged
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