KIC posts 11.6% return for 2023 amid tech stock boom

Sovereign wealth fund Korea Investment Corporation (KIC) posted an 11.6% return for last year, driven by strong gains on listed stocks.

The state-run fund of South Korea logged $189.4 billion of assets under management as of Dec. 31, 2023, up $20.1 billion from a year earlier. It achieved $77.9 billion in accumulated investment gains since its inception in 2005.

Listed stock investment achieved a 22.4% return. The global stock market rallied last year on a boom in artificial intelligence-driven tech and communications share and expectations of a soft landing based on the US’ robust consumption growth, KIC said.

The sovereign wealth fund’s stock investment gains primarily came from the developed markets such as the US, Europe and Japan and tech-related shares, it added.

For fixed-income investment, KIC posted a 6.3% return. Amid interest rate volatility, the fund achieved stable yields amid an outlook of cooling inflation, a downtrend in rates and the bond market recovery.

Traditional assets, which achieved a 14.3% return, made up 78% of KIC’s total assets as of end-2023 – stocks 39.2%, fixed income 31.5% and others such as inflation-linked bonds and cash for 7.3%.

Alternative assets recorded an 8.6% annualized return for a five-year period from early 2019 to end-2023, with a 13.5% return on private equity, 5.5% on real assets and 5.7% on hedge funds. Assets in private markets made up 22% of KIC’s total assets as of end-2023.

For alternative investments, KIC has focused on less cyclical assets with a strong growth outlook in terms of technological advancement and the structural development of industries. The state-run fund is gradually increasing exposure to private debt and infrastructure, particularly in the energy transition and digitalization sectors.

It will also actively explore emerging market fund opportunities via its Mumbai office, which opened late last January.

“Amid heightened geopolitical uncertainties and an unfolding AI-led industrial revolution, KIC will focus on finding new investment opportunities in fast-developing sectors including AI, semiconductors and healthcare,” said its Chief Executive Jin Seoungho.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited this article.