South Korea's National Pension Service, Seoul, hired BlackRock and Grosvenor Capital Management to oversee the 527 trillion won ($457.7 billion) state pension fund's initial allocations to hedge funds-of-funds strategies this year.
NPS said in a statement posted to its website Monday that it will commit $500 million apiece to those managers, which it listed in late May, together with Blackstone Alternative Asset Management and UBS Hedge Fund Solutions, as finalists for its hedge fund of funds search.
NPS Chief Investment Officer Myoun-Wook Kang said in the statement that his team expects the hedge fund allocations to help NPS' investment portfolio deliver stable, risk-adjusted returns.
However, with NPS' initial commitment amounting to a mere 20 basis points of its overall portfolio, hedge fund executives in the region predict additional allocations could be forthcoming soon.
As of April 30, the pension fund reported allocations of 10.8% to alternatives, with 31.8% to equities and 57.4% to bonds.
The NPS website lists its near-term allocation goal for alternatives as 11.5% by the end of 2016 — or just more than $3.2 billion at current levels for the overall portfolio slated for investment in alternatives, broadly defined. Its year-end targets for equities and bonds, meanwhile, come to 33.1% and 55.4% respectively.
