88% of Korean LPs want speedy capital deployment

Asset managers' track record and risk management are the most important factors for South Korean major limited partners when considering new partnerships for alternative investment, a survey found.

The Korea Economic Daily conducted a survey in January for Korea's 26 major LPs, including pension funds, mutual aid and insurers, on their alternative investment and manager selection. The LPs manage a combined 381.1 trillion won ($317.8 billion) in their alternative assets, which account for an average 28.4% of their total AUM. Some 24 out of the 26 LPs currently manage 204.4 trillion won ($170.8 billion) in overseas alternative assets.

To view responses of individual institutions on their alternative asset allocation and fund manager selection, please visit Asset Owners Report.

Track record and risk management skills were picked as the most important factors when selecting general partners, the survey showed. More than 90% of the LPs selected track record, including years of experience and execution capability, as well as risk handling in the 2008 global financial crisis as key elements in choosing general partners.


Other major considerations for GPs include amount of assets under management; transparency of underlying assets and portfolio; speed of capital deployment; and deal pipeline. Particularly, more than 90% of the LPs place importance on deal pipeline when selecting GPs, the survey found. Around 70% of the LPs chose fee level and size of the fund being raised, respectively. 

The Korean LPs put less importance on co-investment opportunities, the presence of Seoul offices, knowledge transfer and other LPs in the fund, the survey showed. More than 30% of the LPs said co-investment opportunities and knowledge transfer are less important when choosing GPs. More than 40% of the LPs said other LPs' involvement in the fund is less important.   


The LPs had different views on first-time funds and emerging market funds. Asked if they would invest in first-time funds and emerging markets, around 30% of the LPs said it depends. Also, 77% of the LPs said they need currency hedging in a fund.

Around 42% of the LPs need one to two months to decide on commitment; 35% said they need two months to three; while 15% said they need more than three months. The others gave no response.

To view responses of individual institutions on their alternative asset allocation and fund manager selection, please visit Asset Owners Report.

Participants in this survey are as follows:

Public pensions and SWF

National Pension Service
Korea Investment Corporation
Korea Post - savings bureau
Korea Post - insurance bureau
Government Employees Pension Service
Teachers' Pension

Mutual aids & associations

Korean Federation of Community Credit
Korea Teachers' Credit Union
Public Officials Benefit Association
Yellow Umbrella Mutual Aid Fund
Korea Scientists & Engineers Mutual Aid
Military Mutual Aid Association

Insurance companies

Hanwha Life Insurance
Kyobo Life Insurance
Shinhan Life Insurance
Samsung Fire & Marine Insurance
NongHyup Life Insurance
DB Insurance
Hyundai Marine & Fire Insurance
KB Insurance
Mirae Asset Life Insurance
Meritz Fire & Marine Insurance
ABL Life Insurance
Prudential Life Insurance
Lotte Insurance
NongHyup Property & Casualty Insurance

Write to Chang Jae Yoo at yoocool@hankyung.com
Jihyun Kim edited this article.