Korea’s Wealth Funds of $145 Billion Moves Towards Fixed Income Assets

In 2018, a sudden shift in the market conditions, South Korea’s wealth funds of worth $145 billion got ignited, and now, there is planning to add it to the bonds or fixed assets and globally cut the shares to secure the returns in double-digit in 2019.

In 2005, Korea Investment Corp was founded. The chief executive officer, Choi Heenam, said in an interview that they aimed to invest money in the foreign-exchange reserves offshore of the country. But, their plan is becoming a bit defensive.

The sovereign wealth funds, also known as KIC globally, are moving towards the fixed income assets, which are considered to be an essential asset class in the five-year trend as reported in the Invesco report in July. According to the report, there are two late-cycle concerns, one is of volatility, and the second is losses from equities. The sovereign is forced towards the defensive position because of these concerns.

Due to higher risks, the entities across the world are tracking highs and optimism about the US-China trade war. Therefore, Korea Investment Corp is cautious.

In 2018, there was a loss of 3.7%, and in 2019, the wealth funds have generated 10.3% of return in eight months. Korea Investment Corp, with only overseas assets, had stocks and bonds of $121.6 billion at the end of August and $23.9 billion as alternative investments.