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FAQ

FAQ

  • 질문 What is the founding law of KIC and what are the regulations concerning management of entrusted assets?
    답변 Under the KIC Act, KIC was established in July 2005. It manages assets entrusted by public funds defined under the National Finance Act. KIC directly invests the entrusted assets or re-entrusts the assets to external managers.
  • 질문 What is the background behind the founding of KIC?
    답변 The Korea Investment Corporation (KIC) was established to efficiently manage assets entrusted by the Korean government, Bank of Korea and public funds to contribute to advancing the domestic finance industry (KIC Act).
  • 질문 What is KIC’s role in advancing the Korean financial industry?
    답변 In accordance with its purpose of establishment, KIC contributes to strengthening the international competitiveness of Korean financial institutions and enhancing market practices by introducing advanced investment techniques. KIC will also nurture finance professionals with global experience who can play an important role in advancing the domestic financial sector.
  • 질문 What is the governance structure of KIC?
    답변

    The Steering Committee deliberates and resolves amendments to the Articles of Incorporation, matters pertaining to mid- and long-term investment policies, matters pertaining to entrustment of asset to the Corporation, matters pertaining to appointment and dismissal of the officers, matters pertaining to approval of budget and account settlement of the Corporation, etc.
     
    The Committee is composed of not more than 12 members, including one Chairman (currently there are nine members). The members of the Committee are i) the head of the trust institution that has entrusted assets exceeding the amount prescribed by Presidential Decree, ii) the President & CEO of KIC, and iii) not more than six persons who are nominated by the Civil Member Candidate Nomination Committee. The term of office of the civil members is two years.
     
    KIC also maintains a Board of Directors that includes the KIC president and directors. The president 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 (as stipulated in Article 18 of the KIC Act) and deliberation by the Steering Committee. Directors are appointed and dismissed by the KIC president following deliberation by the Steering Committee. The Board resolves matters 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 the Board deems necessary.
     
    In addition, the Investment Subcommittee and Risk Management Subcommittee deliberate on matters related to investment management entrusted by the Steering Committee.

  • 질문 What is the procedure for selecting private sector members of the Steering Committee?
    답변 Private sector members are nominated by the Civil Member Candidate Nomination Committee. Composed of persons with expertise and experience in the financial industry and corporate management, this committee is made up of not more than six members including the committee chairman (one candidate each nominated by the heads of the Korea Money and Finance Association, Korea Financial Investment Association, Korea Federation of Banks, Korea Life Insurance Association, and Korean Institute of Certified Public Accountants). The Civil Member Candidate Nomination Committee makes nominations and appointments are made by the President of the Republic of Korea.
  • 질문 How does KIC ensure transparency in managing entrusted assets?
    답변

    As a body that manages Korea’s foreign exchange reserves, KIC has to maintain a certain level of confidentiality. But pursuant to the KIC Act, KIC discloses financial statements, audit reports, mid- and long-term investment policies, asset mix, and total assets under management (AUM) and return on total AUM in order to ensure transparency and accountability.

     

    In accordance with the KIC Act, the Steering Committee is authorized to review the business activities of KIC as part of its oversight function. Such reviews may be entrusted to an outside agency, enabling audits to be conducted by a private accounting firm. The external auditor is selected by the statutory auditor of KIC. In accordance with the National Assembly Act and the Act on the Inspection and Investigation of State Administration, KIC reports on its business activities to the National Assembly. KIC is subject to annual inspections conducted by the National Assembly and audits conducted by the Board of Audit and Inspection.

  • 질문 What is the capital structure of KIC?
    답변 The capital contribution for KIC is KRW 1 trillion and the total amount is contributed by the government. Paid-in-capital is KRW 100 billion to date.
  • 질문 Are all of KIC’s managed assets included in Korea’s foreign exchange reserves?
    답변 A part of the assets managed by KIC are not included in Korea’s foreign exchange reserves. Under guidelines recommended by the IMF, the reserves should be held in traditional asset classes such as bonds and stocks which offer liquidity. The Bank of Korea and the Ministry of Strategy and Finance decide on whether or not to include managed assets in the reserves. Considering the founding purpose of KIC, it would be appropriate to pursue portfolio diversification from a long-term standpoint. Managing all of KIC’s assets as foreign exchange reserves would entail significant constraints.
     
    According to IMF guidelines, “reserves consist of official public sector foreign assets that are readily available to and controlled by the monetary authorities.”  The definition excludes securities below investment grade and assets redeemable only in nonconvertible foreign currencies.
     
    Assets entrusted by the Bank of Korea are entirely included in foreign exchange reserves while assets entrusted by the Ministry of Strategy and Finance (foreign exchange stabilization fund) are mostly included. However, alternative and strategic investments and bonds that are BB grade or lower are excluded.
  • 질문 What are the investment assets and strategies of KIC?
    답변 In accordance with the Act on Capital Market and Financial Investment Business, KIC may re-entrust assets to domestic and overseas asset managers. Based on a related law, KIC may only invest overseas in assets denominated in a foreign currency. KIC may manage entrusted assets as denominated in Korean won if doing so is temporarily unavoidable. In such case, it shall be subject to constraints, such as depositing assets with a financial institution or purchasing government bonds.
  • 질문 What are the investment objectives and principles? What are the asset classes in which KIC invests?
    답변 KIC's investment objective is to achieve consistent and sustainable returns exceeding the benchmark designated by sponsors within an appropriate level of risk. Under principles of prudent and responsible investing, KIC pursues a sustainable increase in returns while (1) minimizing the risks from individual markets and assets through portfolio diversification and (2) exercising flexibility prudently to seize investment opportunities. According to the KIC Act, KIC may invest in marketable securities (including stocks and bonds), foreign currencies, derivatives and real estate. However, the law precludes assets denominated in the Korean currency and direct investment in real assets such as commodities. Investment management agreements concluded with sponsors specify eligible asset classes and final decisions on strategic asset allocation are subject to approval by the Steering Committee, the highest decision-making body of KIC. Investment management agreements also specify benchmark targets that serve as the basis for risk management and performance evaluation.
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