World’s largest SWF awards Korean mandate

The world’s largest sovereign wealth fund, GPFG of Norway, has invested $300 million with Korean manager Truston AMC to invest in domestic equities, AsianInvestor can confirm.

The $650 billion Government Pension Fund Global (GPFG), which is managed by the AM arm of Norway's Norges Bank, is investing the entire sum into mid- and small-cap Korean stocks, it is understood.

This represents a major departure for GPFG, which has voiced its intention to diversify into Asia and emerging markets and out of indebted Europe, among other things, as it struggles to meet a 4% return target amid the low interest-rate environment and volatile equity markets.

Earlier this year media reported that GPFG had aimed to invest $400 million into Korea as part of a pan-Asia strategy and was looking to award mandates to local fund houses. It was reported the fund was planning to invest $100 million with three to four managers in Korea.

This being the first time GPFG has hired a domestic Korean manager it represents a major score for Truston, which this year received an AsianInvestor award for investment performance for institutional funds management.

Truston is solely an equity-focused manager with $5.8 billion in AUM. While it is only the country’s 6th-biggest equity house, it is the largest without distribution outlets, such as a bank or securities arm, attached.

Hwang Sung-taek is its co-founder and CIO (pictured). The company's AUM grew by $1.5 billion last year, thanks to institutional flows from both Korean and overseas investors, and in an interview with AsianInvestor earlier this year Hwang said it was aiming to expand AUM by $2 billion in 2012.

Incepted in 2004 as an investment advisory firm, Truston converted to its current asset management structure and name four years later.

The company has achieved an accumulated return of 170% since 2004, by global investment performance standards, beating the domestic stock market’s 130% accumulated return.

In March last year Truston was awarded an equity mandate along with Samsung Asset Management by sovereign wealth fund China Investment Corporation. It has also managed equity funds for Korea’s $330 million National Pension Service (NPS).

Samsung AM was one of three Korean managers last year to obtain an equity mandate from the biggest SWF in North Asia, as reported by AsianInvestor. It is also building relationships with SWFs in the Middle East, which are looking to award mandates for South Korean equities.

Truston declined to comment on this GPFG mandate owing to a confidentiality arrangement.

GPFG is the ninth largest foreign investor in Korea. Local media report that it opened trading accounts with several Korean securities firms based in London this September.

But GPFG is the largest sovereign fund in the world with $656 billion, followed by Abu Dhabi Investment Authority with $627 billion and China’s State Administration of Foreign Exchange with $568 billion.