KIC lags far behind national pension fund in returns

Korea Investment Corp. (KIC), South Korea's sovereign wealth fund, has made far less profits this year from overseas stock and bond investment than those reaped by the national pension fund, data showed Thursday, raising doubts on its asset management capability. The sovereign wealth fund, which manages 67 trillion won (US$62.7 billion) of taxpayer money, posted a return ratio of 2.47 percent from its offshore stock and bond investment for the first seven months of this year That compares with the 18.07 percent logged by the National Pension Service (NPS) over the same period, the data showed. The KIC has currently invested 48 percent of its assets, or $30.4 billion, in overseas stocks, with 34 percent, or $21.8 billion, poured in bond investment abroad. The KIC cited losses from bond investment due to the jittery market as the main reason for the poor results, but said the figure has well surpassed the benchmark threshold designated by the government. The government gave the KIC the minimum requirement of 0.36 percent return ratio for its investment. The KIC pointed out that its investment strategy is focused on safer assets, which is different from the high-risk, high-return that the NPS has pursued. The KIC manages its fund with the foreign reserves provided by the finance ministry and the Bank of Korea. Its return ratio of stock investment came in at 7.96 percent in the January-July period, with the corresponding figure for bond purchases standing at negative 3.19 percent in the same period, the data showed.