Korea Teachers looks to expand global equity exposure

Mar 4, 2010

The $9 billion Korea Teachers Pension Fund is also interested in allocating more to alternatives, says CIO Lee Yun-kyu.

The Korea Teachers Pension Fund (KTPF) will be more aggressive in equity and alternative investments in 2010, both domestic and globally, says Lee Yun-kyu, chief of its fund operating-management corporation.

KTPF's securities and fund investment management team has close to 30 staff members and in 2009 saw a return on investment of 12.7%. The pension fund has around $9 billion of assets under management as of February, a year-on-year increase of nearly $1 billion.

Of this, Lee's unit manages $7 billion, with the remainder held in the form of loans to the accounts of its 260,000 members, teachers and staff at private schools. By law these employees contribute 6.3% of income to KTPF, which is an affiliated organisation of the Ministry of Education, Science and Technology.

The current portfolio of KTPF indicates that its global investments have decreased from a peak of $800 million to $550 million in the past year or so. Out of this amount, $330 million is currently invested in overseas fixed income and hedge funds. Another $140 million is in global equity funds, for both emerging and developed markets.

Lee says the focus will be on increasing exposure to developed markets, particularly US equities. He would not discuss plans for alternatives in detail, but notes that currently KTPF has a modest, $80 million exposure to real estate in several Asian countries, including China and India.

In 2008, KTPF reached strategic alliance agreements with Goldman Sachs Asset Management and ING Investment Management, to diversify its global investments in return for more training and support. The relationship has disappointed since then, due in part to the global financial crisis. For now, Lee declined to discuss other details of the relationship with these two firms.

Lee previously worked with Korea Investment Trust Management Company as CIO and head of its investment banking division before joining Dongbu Asset Management Company as vice chief executive in 2006. He took over the current position at KTPF in April of 2008.