Korea Investment Corp. reported an 11.6% annual return for 2023, bringing its total assets to $189.4 billion, the sovereign wealth fund said in a statement on Feb. 5.
The performance was driven by strong gains in traditional assets, which accounted for 78% of total assets. Equities made up 39.2% of the portfolio and had a 22.4% return, while fixed income constituted 31.5% of assets and had a 6.3% return.
Alternatives made up 22% of its assets and had a five-year annualized return of 8.6%. Private equity outperformed other asset classes with a 13.5% return. Real estate and infrastructure returned 5.5% and hedge funds 5.7%.
Still, the fund plans to gradually expand its allocation to alternative investments to 25% of total assets by 2025, a spokesperson said. "The alternative investment environment is not as positive as it used to be, with continued high interest rates and recession concerns. Still, I believe alternative investments offer advantages, such as strong risk-adjusted returns through the capturing of illiquidity premiums and enhanced portfolio diversification," KIC CEO Seoungho Jin said in his New Year message in January.
KIC expanded its investments in private debt and energy transition infrastructure in 2023, the Feb. 5 statement said. The fund focuses on alternative asset classes that are less cyclical, have potential for growth and related to technological advancements and industrial development.
"Amid heightened geopolitical uncertainties and an unfolding artificial intelligence-led industrial revolution, KIC will focus on finding new investment opportunities in fast-developing sectors including AI, semiconductors and healthcare," said Jin in the statement.
The results are a reversal of KIC's performance in 2022, when it reported an annual return of -14.36%, its worst loss since 2008. Total assets fell to $169.3 billion in 2022 from $205 billion in 2021.
In 2022, KIC's alternative investments had an annualized return of 8.23% and outperformed traditional assets, which posted a -17.58% return.
