Korean sovereign, pension funds preparing to load up on equities

Posted Jul 21st 2009 3:00PM by Tom Johansmeyer
Filed under: International Markets, Forecasts, India, China, Brazil, Russia

Its sights set on the United States and Asia, South Korea's $30 billion sovereign wealth fund is hunting for equities. Korea Investment Corp. (KIC) doesn't see bonds outperforming stocks over the long term, which is what has prompted the move.

Once the reallocation is executed, equities will account for half of KIC's "traditional" investments. Today, it stands at 40%. High quality equities and fixed income securities comprise 90% of KIC's portfolio, with the rest, one would gather, consisting of "non-traditional" investments.

With equity values plunging last year (even if they did turn the corner for the year yesterday), discounts abound, especially if you have the resources to buy aggressively (and I guess a $30 billion portfolio counts).

The KIC isn't alone. South Korea's National Pension Service, which is the country's largest investor, is also exploring overseas equity positions, intending to double its stock holdings in overseas companies over the next six years. Brazil, Russia, India and China re the major targets. If all goes as planned, foreign investments my take up 15% of the pension fund's portfolio, which has $204.7 billion in assets under management and is the fifth largest in the world. Currently, 7.4% of its assets are in overseas equities.

Tags: bric, equities, international, inthenews, korea, korea investment corp, KoreaInvestmentCorp, pension, pension funds, pensionfund, PensionFunds, pensions, south korea, SouthKorea, sovereign funds, sovereign wealth funds, SovereignFunds, SovereignWealthFunds