Korea's KIC to boost alternatives exposure to as much as $10b

According to Bloomberg, the sovereign wealth fund wants to increase holdings of private equity, real estate and hedge funds to as much as 20% of its portfolio by 2016, from 6.1% at the end of 2012.

"We are going to spend between $5 billion and $10 billion on alternative assets over the next three years," said Lee Dong Ik, chief investment officer with KIC. "We like to have a balanced portfolio in terms of strategies and regions."

Set up in 2005, KIC initially bought bonds before adding equities to its portfolio in 2007. Two years later, it expanded to distressed debt, real estate and private equity. According to its 2012 annual report, private equity investments have yielded an average 11% annually, while its investments in hedge funds and real estate have returned 7%.

KIC has around $57 billion of assets under management as of the end of 2012, with 45% in equities, 39% in bonds and around 10% percent mainly in cash, inflation-linked bonds and its stake in Bank of America.

KIC follows a number of other state funds in increasing its exposure to alternative assets. Singapore's Temasek Holdings has nearly doubled its holdings of unlisted assets to 27% of its portfolio over the past eight years, while Australia's Future Fund increased its proportion of private equity and real estate assets to 13% from 6.3% in the three years through March.

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• Topics
• LPs
• North Asia
• LPs
• South Korea
• KIC
• Sovereign wealth fund