The Korea Investment Corp. (KIC) reported an impressive return of 11.73% on investments as of the end of September 2023. This growth is largely attributed to a sustained rally in US technology stocks, positioning KIC on track for its highest annual return since its inception in 2005. The sovereign wealth fund’s performance is nearing its record annual gain of 13.7%, achieved in 2020.
As of September, KIC’s assets under management reached $227.6 billion, a significant increase of $21.1 billion from the end of 2022. Since its establishment, KIC has generated cumulative investment gains totaling $118 billion. The portfolio remains diversified, with traditional assets accounting for $178 billion (78.2%) and alternative investments making up the remaining $49.6 billion (21.8%).
Performance Breakdown and Future Projections
Within the traditional assets category, equities are valued at $94.6 billion, while bonds account for $73.2 billion. KIC has steadily increased its exposure to growth stocks over recent years. The performance of traditional assets has been strong, returning 12.96% and surpassing its benchmark by 24 basis points. Specifically, equities saw a gain of 18.74%, outperforming the benchmark by 15 basis points, and bonds rose by 6.72%, exceeding the benchmark by 45 basis points.
KIC’s alternative investments are also noteworthy, with an annualized return of 8.01% over the past decade. This segment includes private equity, which led the way with a return of 11.9%, and infrastructure investments yielding 10.53%. Hedge funds and real estate have produced annualized returns of 5.13% and 3.91%, respectively.
An investment banker noted, “KIC could post its best-ever annual return even if performance remains flat in the fourth quarter.” Yet, he emphasized the importance of monitoring potential volatility as the year draws to a close. As KIC continues to navigate the ever-changing investment landscape, its strategic focus on technology and growth stocks may be pivotal in achieving record returns.
