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.

Lehman Brothers Holdings (NYSE: LEH) has approached a Korean sovereign wealth fund (SWF) about investing. But Lehman probably won't get the money it seeks. Reuters reports that Korean Investment Corp (KIC), an SWF that manages about $20 billion and is an investor in Merrill Lynch (NYSE: MER), is unlikely to invest in Lehman.

Meanwhile, Bloomberg reports that investors on the Einhorn side of Lehman -- those hoping its stock will drop -- are increasing their wager. It notes that options traders increased their bearish positions to a two-month high yesterday. With one analyst expecting Lehman to report a second-quarter loss of 50 cents a share during the week of June 16, put option volume rose to 283,676 contracts, or quadruple the 20-day average, and bearish bets on the company exceeded bullish ones by 1.6-to-1.

As I mentioned during my talk at Stanford in April, SWFs have been burned by their investments in the U.S. finance industry. One of them, the Citic Group, was lucky it was able to bail out of its commitment to invest $1 billion in Bear Stearns. But that close call is likely to keep other SWFs from throwing good money after bad.