KIC’s likely new CIO seen as a smart pick

Korea Investment Corporation's apparent preference for Park Dae-yang to be its next chief investment officer has hailed by investment industry executives as a sensible pick to replace outgoing investment head Kang Shin-woo. 

According to several sources and media reports, Park, who is currently CIO of the Korea Teachers’ Pension Fund, appears to be all but confirmed. He is understood to be going through the final review by Korea's Blue House.

Park Dae-yung

Park did not respond to AsianInvestor’s request for a comment. But investment industry observers and advisers agreed that he has what it takes to succeed Kang as CIO of the $140 billion sovereign wealth fund. Kang's three-year term expired on June 12.

“From Mr. Park’s ample experience in the investment industry including current role as the CIO of Teachers' Pension, he would be well positioned as the CIO of the sovereign wealth fund,” said a Hong Kong-based consultant who advises Korean asset owners.

A Seoul-based consultant who also offers investment advice to Korean asset owners added that Park’s boasts an array of relevant experience. He has worked on various liability structures, such as insurance, investment trust, mutual funds and corporation pension fund, during his career.

Likewise, he has experience with all main asset classes, having led strategies for fixed income, equities and alternatives.

Park was appointed as the CIO of Teachers' Pension on December 15, 2016. Originally appointed for a two-year term, the pension fund decided to extend his appointment by another year until the end of 2019. AsianInvestor understands that Park had also voiced his interest to extend his tenure at Teachers' Pension further if it had become an option.

Prior to working at the pension fund, Park was the CIO of what was formerly Allianz Life, the Korean subsidy of the German insurer giant. He left Allianz in mid-2016, just as Allianz was selling its Korean subsidiary to Chinese Anbang Life. It was subsequently rebranded as ABL Life. 

Kang Shin-woo

Park started his career as a fund manager at Samsung Life Insurance, during which he was stationed at the insurer's London office. He has also worked as an asset management specialist at Samsung Investment Trust Management, spent a period at HDC Asset Management (formerly I Investment Trust Management), and worked at the Korean Federation of Community Credit Cooperatives, where he was the investment strategy head. 

According to the Seoul-based consultant, it is understood that Park’s experience from London helped him build both strong international experience and an ability to communicate well in English, both of which are important for a sovereign wealth fund.

Park graduated from Korea University, one of the country’s top universities, with a major in business administration. He also holds an MBA from Iowa State University, another example of his international experience.

ROOM FOR IMPROVEMENT

At KIC, Park will be put in charge of a much larger portfolio than Teachers Pension's W17.4 trillion ($15.3 billion).

The sovereign wealth fund has assets under management totalling about $140 billion, In April, the now former CIO Kang said KIC had AUM of about $140 billion. Traditional assets make up about 80% of this, evenly split between equities and fixed income, while alternatives make up slightly more than 16%. The plan is to increase that to 20% “over the mid- to long-term”, Kang said.

KIC’s return on total assets in 2018 stood at -3.66%. While this was a poor return it occurred during a year in which many asset owners saw their AUM drop. Its five-year annualised return was 3.38% and it has an annualised return of 3.76% since inception in 2005, according to the sovereign wealth fund’s website.

The sovereign wealth fund is likely to had its interest piqued in Park from his ability to diversify the portfolio of Teachers Pension two-and-a-half year stint. Over the course of this period Park has helped raise its overseas investments from 21% when he joined to 30% today, he told AsianInvestor in April. He also told the audience at AsianInvestor’s 13th Institutional Investment Forum Korea that Teachers Pension's annualised return was 7.5%.

Furthermore, Park headed the launch of a strategy to increase to increase the pension fund's proportion of alternatives. The private asset classes currently make up just above 9% of its portfolio, and can rise to a ceiling of 20% of AUM. Additionally, that ceiling is likely to be raised to 30%, Park told AsianInvestor.

In May, Park said Teachers Pension’s yearly target returns would be 5.5% for overseas alternatives and around 5% for domestic alternatives.