Yellow Umbrella Mutual to invest $500 mn in global multi-asset funds

The Yellow Umbrella Mutual Aid Fund, a $12 billion savings arm for South Korea’s small business owners, has entrusted two Korean asset managers to invest $500 million in global multi-asset funds, according to a local media report.

It will mark the mutual aid’s first investment in global multi-asset funds, which invest across various asset classes from equities, fixed income and currencies to real estate to reduce volatility in their portfolios.

Under the mandate, Hanwha Asset Management Co. and Shinhan BNP Paribas Asset Management Co. will receive $300 million and $200 million from Yellow Umbrella, respectively, for a two-year investment, the Financial News said on Oct. 4, citing unnamed investment banking sources.

The two asset managers will then pick global fund managers as early as this month in consultation with the mutual aid to initiate the investment, which will be carried out either in a separately managed account, or via a fund of funds.

Yellow Umbrella may increase capital allocation to them, depending on performance, according to the report.

It managed 14.4 trillion won ($12.4 billion) as of the end of March, with fixed incomes making up 63.5%, followed by alternative investments at 17.8%. It aims for a 3.5% annual return this year, in line with its average return over the past four years.

Jeong Du Yeong, former chief investment officer of the Korea Scientists and Engineers Mutual-aid Association (SEMA), took office as Yellow Umbrella Mutual's CIO in May 2019.

During his stint at SEMA as CIO between May 2015 and April 2019, he spearheaded its first investment in global multi-asset funds in 2018.

In June of this year, SEMA mandated Mirae Asset Global Investments Co. and Korea Investment Management Co. to invest a combined $400 million in global multi-asset funds via foreign investment managers. The association managed 7.2 trillion won in assets as of the end of June.

By Sang-eun Lucia Lee

selee@hankyungcom