KTCU posts highest investment return since 2009

Korean Teachers’ Credit Union (KTCU), a retirement fund for South Korean teachers and employees, earned an 11.3% return from investment last year, which equals 4.4 trillion won ($3.7 billion). The return rate is the highest since 2009, when KTCU gained more than 30% of return just after the global financial crisis.

The retirement fund’s assets under management increased from 36.7 trillion won in 2020 ($31.4 billion) to 42.4 trillion won ($35.3 billion) in 2021, a KTCU official said.

The annualized return of 2021 was mainly backed by alternative investments, the official said. Last June, KTCU realized a 74.2 billion won gain by selling part of its stake in K-pop group BTS’ music label HYBE Co., in which the retirement fund invested 17.3 billion won in 2018 via STIC Investments Inc. 

In the same month, KTCU earned a combined 173 billion won from its eight-year investment of A$100.8 million in Aberdeen Asset Management’s first public-private partnership infrastructure fund. The Korean retirement fund divested of the holding, a 78.4% stake in the PPP fund, to an unknown third party. 

In March 2021, KTCU gained 98.5 billion won from the sale of management rights of JobKorea, one of the biggest job search platforms in Korea. KTCU invested 100 billion won via Korean private equity firm H&Q in 2013, which acquired a 100% stake in JobKorea, and sold the equities to Affinity Equity Partners. Thanks to the exits, KTCU had a 9.1% return as of the end-June last year.

On the other hand, the retirement fund’s returns from equities and bonds last year slid compared with the returns in 2020. The equity investment, accounting for 20.4% of its AUM, gained a 12.8% return in 2021. The equity assets earned a 32.7% return in 2020, backed by a huge rise in global stock prices. KTCU’s bond investment, making up 14.8% of the AUM, realized a 3.1% return last year. The bond assets had a 3.9% return in 2020.

KTCU allocates 58% of AUM in alternative investment as of the third quarter of 2021 while having 60% of the alternative assets overseas. The retirement fund will hold the proportion this year, its former Chief Investment Officer Kim Ho-hyun said during the interview with The Korea Economic Daily last November.

The retirement fund nominated Park Man-soo as its new CIO in January. Park started his career at KTCU in 1992, leading some huge real estate deals including the acquisition of Lewis Carlsbad Desalination Plant in San Diego in 2019 and the purchase of London-based office Vintner’s Place in 2012.

Write to Jong-woo Kim at jongwoo@hankyung.com
Jihyun Kim edited this article.