Yellow Umbrella Mutual to deploy $135 mn to blind pool funds in 2021

South Korea's Yellow Umbrella Mutual Aid Fund will commit about 120 billion to 150 billion won ($108 million-$135 million) to blind pool funds of venture capital and private equity investments this year, in line with a plan to boost and diversify its alternatives portfolio.

“This year, we will increase our alternatives and cut fixed income, while maintaining the equity portion at the current level,” the mutual aid’s Chief Investment Officer Jeong Du-Yeong was quoted as saying by the Asia Economy on Sunday.

“We will deploy around 120 billion to 150 billion won to blind pool funds, including VC funds,” he told the South Korean online news provider.

The $13 billion savings arm for Korean small business owners confirmed the report, saying that it will release its request for proposals for VC funds next month. It is planning to issue RFP for private equity funds around the autumn of this year.

The Yellow Umbrella Mutual has been enjoying double-digit asset growth since 2016 when its assets under management stood at 5 trillion won. Its AUM is expected to swell by 2.8 trillion won to 17.3 trillion won by year’s end, or up 19.3% year on year.

The estimated 2.8 trillion won in net asset growth will be composed of new investments and proceeds from investment exits.

According to its 2021 business plan, alternatives will take a 25.8% share of its AUM, up from last year’s 19.1%; fixed income with 55.6% versus 62.1%; and equities with 15.6% versus 15.5%.

Last year, its return on investments averaged 4.94%, above the target of 3.5%.

In an interview with The Korea Economic Daily late last year, CIO Jeong said he would diversify the fund's fixed income-heavy portfolio into global private equity and venture capital investments, which are expected to deliver 5-6% returns after the coronavirus pandemic subsides.

The mutual aid is under the supervision of the Ministry of SMEs and Startups, and managed by the Korea Federation of SMEs.

Write to Ri-Ahn Kim at knra@hankyung.com
Yeonhee Kim edited this article.