South Korea’s $189.4 billion sovereign wealth fund, Korea Investment Corporation (KIC), posted a positive annual return of 11.3% in 2023—a turnaround from the negative returns of the previous year—driven by strong gains on its investments in traditional assets.
Traditional assets—including equities and fixed-income assets—generated 14.3% returns. The returns on equity investments stood at 22.4%, while fixed-income assets yielded returns of 6.3%, according to a statement on Monday.
Equities represented 39.2%, and fixed income 31.5%, of the wealth fund’s total assets.
In 2022, KIC had posted a 14-year-low annual return of -14.4% due to inflation-linked underperformance in equities and bonds that dragged down its overall portfolio.
KIC’s annual performance since 2019
| Year | Annual returns |
|---|---|
| 2023 | 11.6% |
| 2022 | -14.4% |
| 2021 | 9.1% |
| 2020 | 13.7% |
| 2019 | 15.4% |
Source: KIC
“In an increasingly challenging and volatile market environment, KIC has weathered well as our proactive asset allocation strategies based on in-depth research on various macroeconomic scenarios kept our portfolio resilient for the long term,” said KIC’s CEO Seoungho Jin. The Korean wealth fund leader added that the fund will also focus on new investment opportunities in fast-developing sectors including AI, semiconductors, and healthcare.
Created with $1 billion in assets almost two decades ago, KIC’s assets under management soared to $189.4 billion in 2023—up by $20.1 billion from the previous year. The group, which is the world’s 15th-largest sovereign wealth fund by assets, recorded accumulated investment gains of $77.9 billion since 2005.
Alternative assets
KIC is also one of the world’s most active investors in alternative assets, with a 22% allocation in its overall portfolio in 2023.
The asset class reaped an 8.6% annualised return over the five years from 2019 to 2023 and a 7.8% annualised return since inception in 2009. Its private equity investments generated an annualised return of 13.5% in the period, followed by real estate & infrastructure at 5.5%, and hedge funds at 5.7%.
“For alternative investments, KIC has focused on asset classes that are less cyclical and with a strong growth outlook on the back of technological advancement and industrial development,” KIC said in the statement.
The Korean investor has also been gearing up investments in energy transition infrastructure and private debt in recent times. In 2022, the group purchased a minority stake in management companies of Golub Capital, one of the most prominent credit asset managers in the US.
KIC last week announced the launch of its third office in Asia in India’s Mumbai to ramp up its exposure to the venture capital and private equity sector.
The state-owned fund has also been making key appointments in the last three years as part of efforts to step up its investment game. In 2022, KIC promoted Lee Hoon as chief investment officer and brought in an ex-Bank of Korea executive Jung Ho-seok as chief risk officer, both on three-year terms.
The appointments came after Sungjun Song was promoted as head of KIC’s private equity division while Kim Jintae was appointed as head of the absolute returns group in charge of hedge fund investments in 2021.