Korean military fund to pick new CIO from within for first time

Mar 05, 2017 (Gmt+09:00)

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South Korea’s Military Mutual Aid Association (MMAA) will find a successor of the retiring Chief Investment Officer, Sang-ho Lee, inside its organization this month for the first time in its history, whereas the Teachers’ Pension has recently replaced its first internally-promoted CIO with an investment manager from the outside.

The military savings fund, with $8.5 billion in assets under management, believes that it has built a talent pool enough to choose a CIO from the inside and the internal promotion would boost employee morale.

Jin Woo Kim, head of the MMAA’s alternative investments and Jae Dong Kim, head of its equity investments, are widely tipped for the position, according to investment banking sources on March 2.

Industry watchers say that the move to find CIOs from within their organizations underscored increased capabilities at domestic savings funds. The Korean Teachers’ Credit Union, a $25 billion retirement fund, has been promoting its employees as CIOs since the creation of the role.

But many of them, seemingly focused on short-term results, prefer hiring experienced investment managers from the outside.

Last December the Teachers’ Pension named a former head of investments at Allianz Life Insurance Co. Ltd., Dae-yang Park, to replace Min-ho Park. The latter was the first CIO promoted from within the pension fund and headed its investments between 2013 and end-2016.

In general, CIOs of South Korean pension and savings funds serve for two years and their tenure can be extended on a yearly basis.

At the MMAA, Lee’s successor will take the helm of financial asset management - alternative and equity investments - starting on April 1.

The military fund has separated financial investments from construction-related investments since 2015, as does the Police Mutual Aid Association. The construction division of the MMAA, which handles domestic real estate investments including project financing, has been led by In-soo Shin since 2015.

By Daehun Kim

daepun@hankyung.com