Global alternatives boost KTCU’s H1 investment returns

Alternative investments became the best-performing asset class for the Korean Teachers’ Credit Union (KTCU) in the first half of this year, returning 6.9%, the $28 billion retirement fund said on August 31.

The first-half return on alternatives was slightly higher than the 6.6% gain from the asset class in the year-earlier period. They accounted for 55.2% of KTCU’s investment portfolio as of the end of June.

In particular, the return from overseas real assets, including real estate and infrastructure investments, leapt to 9.7%, beating the 6.2% return posted for the same period last year.

Overseas real assets accounted for 40.4% of KTCU’s total alternative portfolio at the end of June.

In comparison, returns from equities and fixed-income securities both at home and abroad ranged from 2.5% to 4.3%. Overseas financial assets, including private equity and private debt investments, returned 4.9%, less than half their result a year earlier.

The three asset classes – alternatives, equities and fixed income -- beat their benchmarks for the first half.

Overall, KTCU posted an average investment return of 5.4% in the first half of this year, slightly below the 6.3% a year earlier.

But its half-year results stood out against the National Pension Service (NPS), which reported a 0.5% return on investment in the first half of the year.

To cushion the negative impact of coronavirus, KTCU has increased capital commitments to global blind-pool funds specializing in healthcare and software investments, while raising exposure to non-contact and biotechnology sectors for equities investment, a KTCU source told The Bell, a Korean online media source. He added that its second-half investment return would remain stable.

This year, KTCU made its first capital commitment to CVC Capital Partners’ buyout fund, along with the Public Officials Benefit Association.

Since January of last year, Ho Hyun Kim has been leading KTCU’s investments as chief investment officer. The company managed 33.1 trillion won ($28 billion) in assets as of the end of June.

Write to Seon-pyo Hong at rickey@hankyung.com


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