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FAQ

FAQ

  • 질문 What are the benchmarks adopted by KIC and how were the benchmarks chosen?
    답변

    The Morgan Stanley Capital International All Country World Index ex Korea (unhedged) serves as the benchmark for the stock portfolio while the Bloomberg Barclays Global Aggregate Index ex KRW ex Korea (unhedged) is the benchmark for the bond portfolio.

     

    Other indeces are also applied for each of asset classes.

  • 질문 What is the difference between active management and passive management?
    답변 In active management, fund managers decide on specific investments to generate optimal returns relative to a benchmark index or portfolio. This is in contrast to passive management. For example, an active manager invests with the goal of outperforming the market whereas a passive manager will try to replicate the benchmark index. For this reason, passive management is also referred to as indexing, as it follows the benchmark and considers its interest rate and risks.
  • 질문 What efforts are being made by KIC to enhance global asset management capabilities?
    답변 i) Asset allocation
     KIC allocates assets based on thorough research into specific regions and sectors and systematic data management. For strategic asset allocation (SAA), KIC analyzes changes in the risk/return profile of each asset class according to changes in global financial markets and revises investment guidelines accordingly. Through efficient tactical asset allocation (TAA), KIC explores mid- and long-term investment opportunities and enhances the allocation process.
     
     ii) Investment portfolio
     KIC is enhancing direct investment capabilities to consistently generate excess returns while using high Caliber external managers that concentrate on specific regions and sectors.
  • 질문 How does KIC deal with risks related to asset management?
    답변 KIC is enhancing risk management to deal with increasingly sophisticated investment assets and strategies. We are taking measures to ensure more effective processes and systems, to manage the risk of adopting new investment strategies, including tactical asset allocation, while enhancing the role of risk management in line with the expansion of alternative investments. KIC is also refining its system for assessing and measuring investment performance, for more methodical evaluations.
  • 질문 What is KIC’s hiring policy?
    답변 KIC recruits new and experienced employees according to an annual business plan. We use a fair and impartial hiring process that includes a review of application documents and interviews. KIC also plans to recruit and foster more global finance professionals through local hiring at its overseas offices. For details, please refer to the “Career” section of the KIC website.
  • 질문 Does KIC provide internship opportunities?
    답변 KIC has offered on-site internship programs since 2007 in an effort to nurture finance professionals and specialists. Programs include a 2-month summer internship for students currently enrolled in school and a youth internship for those who have completed their studies. Through these programs, participants can gain the skills they'll need in the workforce.
     
    Interns are selected according to job function based on a survey of personnel needs in KIC's various departments. Interns can also take advantage of training opportunities through participating in mentoring programs, attending global investment seminars and more.
  • 질문 Does KIC have any overseas offices? What are their roles?
    답변

    Presently, KIC has offices in New York (opened in July 2010), London (opened in December 2011) and Sinapore (opened in September 2017).

     

    Overseas offices' responsibilities include research and analysis into international finance and capital markets, trading of traditional assets in the regional markets (bonds, stocks), uncovering investment opportunities in alternative investments/monitoring alternative investment portfolios, and pursuing cooperation with related organizations.

  • 질문 What internal controls are in place to ensure sound asset management and protect the interests of sponsors? What are the main roles of the Compliance and Legal teams?
    답변 KIC has established basic procedures and standards that employees should follow to protect sponsors that entrust assets with KIC. (For details, please refer to the “Compliance Standard” section on the KIC website.)
     
    The main functions of the Compliance Team are: i) investment compliance – monitoring for breaches of individual investment guidelines and unfair transactions, ii) regulatory compliance – monitoring for compliance of investment procedures  with the applicable laws and regulations, and iii) legal services – reviewing  various agreements to which KIC is a contract party and participating in negotiation processes.
     
    Investment compliance deals with the management of investment risk, which encompasses both pre and post-investment compliance monitoring. Post-compliance monitoring is designed to ensure that any guideline breaches are detectedafter investments are made and thatpre-compliance monitoring system (POMS) is designed to check potential compliance issues prior to investments.. This system is also used to monitor tolerance, trading limits, and watch-lists.
     
    For regulatory compliance, KIC maintains a compliance program to  monitor compliance with various laws that apply to KIC. KIC has also  put in place procedures for self-inspection, individual investment monitoring and security monitoring. In addition, materials are periodically submitted to overseas supervisory authorities,  including Form 13F report to the US Securities and Exchange Commission (SEC).
     
    Legal services include activities to standardize major contracts concluded by KIC and building a database of legal advice provided by outside experts.
  • 질문 How does KIC’s investment performance compare with that of other pension funds and similar organizations?
    답변 Pension funds in Korea use different standards, such as the use of different currencies to measure investment performance, so a simple comparison is not appropriate – KIC’s investment returns are based on a foreign currency whereas Korea’s pension funds use the Korean won. An accurate comparison with sovereign wealth funds of other nations is also difficult since most of them do not disclose information on assets under management, asset allocation and investment returns.
  • 질문 What is the procedure for selecting external managers?
    답변

    KIC selects external asset managers taking into consideration the expertise, transparency and efficiency of their decision-making process.
     
    The selection process is broadly classified into the primary review, secondary review and final approval. Thorough review based on this three-stage procedure ensures transparency and objectivity.
     
    Procedure details:

    1) The primary review checks for investment capabilities based on the review of proposals submitted by external managers and due diligence conducted by the external fund management team.

    2) In the secondary review, the final candidates are chosen by the Investment Working Committee, which comprises the Chief Investment Officer (CIO) and investment and risk management experts of KIC.

    3) Selections are then finally approved by the Investment Committee (IC), after a review from the IC meeting.

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