Korea Post plans to select multi-strategy fund of hedge fund managers

Korea Post’s insurance unit is preparing to pick global fund-of-hedge-fund managers using multi-strategy and will soon determine the amount of investment and how many management firms it will select, said a Korea Post source on March 2.

The mandates will come as the insurance management bureau of the state-run agency plans to allocate 1 trillion won ($871 million) to alternative assets this year, after committing fresh 580 billion won to alternative investments in 2016.

“In selecting global fund of hedge fund managers this time, we will not only look at the profitability and stability of the management companies, but also take into consideration whether they can transfer investment strategies to local management companies,” the Korea Post source told the Korea Economic Daily.

Korea Post’s insurance unit, with 50 trillion won assets under management, has started investing in global hedge funds since 2008. It set up an alternative investment division this year, and plans to deploy more than 10 employees to the division.

“After single-strategy funds using long/short or event-driven strategy showed deteriorating performance recently, big institutional investors, including the National Pension Service and Korea Post, are turning their eyes to funds of hedge funds,” said an investment banking industry source.

South Korean insurance firms are also considering investing in hedge funds to make up falling returns from traditional assets.

By Donghun Lee

Leedh@hankyung.com