Korea wealth fund KIC’s investments rebound on gains in stocks and bonds

Korea Investment Corporation’s (KIC) investments bounced back last year with an annual return 11.6%, thanks to strong gains on traditional assets such as stocks and bonds which account for more than three-quarters of the sovereign wealth fund’s portfolio.

According to KIC Chief Executive Officer Seoungho Jin, the fund will focus on investing in fast-developing sectors such as semiconductors and healthcare, citing “heightened geopolitical uncertainties and an unfolding artificial intelligence-led industrial revolution”.

KIC’s return from equity investments jumped 22.4% in 2023 while the return from its fixed income investments rose 6.3%, the wealth fund says in a statement on February 5.

The overall return from traditional assets, which account for 78% of KIC’s investments, increased 14.3%.

The wealth fund’s accumulated investment gain since its inception in 2005 was US$77.9 billion. As of end-2023, KIC had $189.4 billion of assets under management, nearly 12% higher than a year earlier.

The performance was a marked contrast to 2022, when KIC reported an annual return of minus 14.6% as global stock and bond markets were hammered by rising interest rates as central banks moved to rein in soaring inflation.

According to KIC, it has focused on asset classes that are less cyclical and which have a strong growth outlook on the back of technological advancement and industrial development.

The fund has also expanded investments in private debt and energy transition infrastructure, and says alternative assets earned it an annualised return of 8.6% in the five years to 2023.

“In an increasingly challenging and volatile market environment, KIC has weathered well as our proactive asset allocation strategies based on in-depth research on various macroeconomic scenarios kept our portfolio resilient for the long term,” Jin says in the statement.

“Amid heightened geopolitical uncertainties and an unfolding artificial intelligence-led industrial revolution, KIC will focus on funding new investment opportunities in fast-developing sectors including artificial intelligence, semiconductors, and healthcare,” he adds.