Sovereign wealth funds
Korean sovereign wealth fund KIC logs record loss in 2022
Its annualized return was -14.4% amid the poor performances of equities and bonds
By Feb 15, 2023 (Gmt+09:00)
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Sovereign wealth fund Korea Investment Corporation (KIC) posted the largest annual loss last year since its inception in 2005, according to its 2022 earnings report.
The fund saw a record shortfall of $29.7 billion last year due to poor performance of equities and bonds. The annualized return was negative 14.4%, the worst percentage since 2008.
KIC’s cumulative profit plunged 34% to $58.2 billion as of end-2022 from $87.9 billion a year ago. Its asset under management (AUM) of $205 billion, the world's 14th-largest for a sovereign wealth fund as of end-2021, dropped to $169.3 billion as of end-2022.
Traditional assets were heavily hit last year – losses on equities and bonds were 19.3% and 16.7%, respectively. Between 2018 and 2022, the annualized returns of equities and bonds were 5.7% and negative 1.5%, respectively.
Alternative investments outperformed traditional ones. Private equity and real assets showed 14.7% and 7.6% returns over the past five years. Hedge funds achieved a 4.8% return during the same period.
As of end-2022, KIC allocates 38.3%, 31.5% and 22.9% of its assets to equities, bonds and alternative investment, respectively. The fund increased exposure to alternative investment by 540 basis points last year, while reducing it to traditional assets by 230-340 basis points.
Write to Byeong-Hwa Ryu and Jin-Gyu Kang at hwahwa@hankyung.com
Jihyun Kim edited this article.
The fund saw a record shortfall of $29.7 billion last year due to poor performance of equities and bonds. The annualized return was negative 14.4%, the worst percentage since 2008.
KIC’s cumulative profit plunged 34% to $58.2 billion as of end-2022 from $87.9 billion a year ago. Its asset under management (AUM) of $205 billion, the world's 14th-largest for a sovereign wealth fund as of end-2021, dropped to $169.3 billion as of end-2022.
Traditional assets were heavily hit last year – losses on equities and bonds were 19.3% and 16.7%, respectively. Between 2018 and 2022, the annualized returns of equities and bonds were 5.7% and negative 1.5%, respectively.
Alternative investments outperformed traditional ones. Private equity and real assets showed 14.7% and 7.6% returns over the past five years. Hedge funds achieved a 4.8% return during the same period.
As of end-2022, KIC allocates 38.3%, 31.5% and 22.9% of its assets to equities, bonds and alternative investment, respectively. The fund increased exposure to alternative investment by 540 basis points last year, while reducing it to traditional assets by 230-340 basis points.
Write to Byeong-Hwa Ryu and Jin-Gyu Kang at hwahwa@hankyung.com
Jihyun Kim edited this article.
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