A belief that no tree grows to the sky and a cautious approach to portfolio construction has left the Seoul-based Public Officials Benefit Association relatively well-positioned to fight through this year's ugly environment for the global economy and markets, the fund's CIO said.
While the coronavirus' wrecking-ball path through the global economy was totally unexpected, POBA's team had anticipated that the new year would not match 2019, when "every asset class skyrocketed in price," said Dong Hun Jang, the 14.3 trillion won ($11.7 billion) mutual aid association's chief investment officer.
POBA began the year with a record 10.1% of its portfolio in cash, 55% in alternative assets and only 14% in publicly traded equities, Mr. Jang said. The remaining 20% or so of the portfolio was in structured products, fixed income or loans to the association's participants.
After some recent rebalancing, POBA's equity allocation now comes to about 13% of its portfolio and some of its cash holdings have been funneled to real estate investment trusts, with more likely heading toward listed infrastructure assets, Mr. Jang said. He declined to say how much cash the fund is currently holding.