NPS, KIC emphasize portfolio diversification at Seoul forum

Chief executive of the NPS Kim Tae-hyun, left, and chief executive of the KIC Jin Seung-ho.

South Korea’s two major institutional investors, the National Pension Service (NPS) and Korea Investment Corp (KIC), underscored the need for portfolio diversification in times of challenging market environment.

“The NPS will seize the opportunity presented by challenging market conditions to establish a real estate investment portfolio with the potential for mid-to-long-term growth,” said Kim Tae-hyun, chief executive of the NPS, during a the Global Alternative Investment Insights 2023 forum co-hosed by Maeil Business Newspaper and the European Chamber of Commerce in Korea.

Kim’s remarks suggest that NPS would increase the proportion of global real estate investment trusts (REITs), often marked by high liquidity, in its portfolio.

“The NPS plans to expand its investments in a niche sector with low vulnerability to economic shocks, which spans data centers and forests,” Kim said.

The CEO also announced a plan to broaden the investment portfolio by including infrastructure and private equity.

“The NPS aims to diversify its investment portfolio into digital and renewable energy, which are sectors that are expected to gain from government policy shifts,” he said.

In private equity, the NPS will explore opportunities in distressed asset funds, capitalizing on the prevailing economic challenges.

Jin Seung-ho, chief executive of the KIC, highlighted the advantages of alternative investments at the forum.

“The KIC is focusing on energy transition and other infrastructure sectors with low sensitivity to macroeconomic conditions while considering direct lending to be a key point in the private equity portfolio,” Jin said.

He added that the KIC is exploring investment opportunities in leasing sectors with strong fundamentals, such as data centers.

The KIC announced its goal to increase the proportion of alternative investments to 25 percent by 2025 from 22.8 percent as of late 2022. “The KIC will enhance its geographical diversification by increasing direct investments to foster the expertise of our in-house professionals, with an increased allocation in the Asian market,” Jin said.