S.Korea's KIC to strengthen responsible investments

Korea Investment Corporation (KIC) plans to actively voice its opinions on portfolio companies' management over the next two years to tighten its responsible investment.

The South Korean sovereign wealth fund will select 10 overseas companies this year to raise its shareholder voice, rather than simply exercising voting rights, industry sources said on March 5.

KIC will increase the number of target firms to 50 by 2024 and 150 — 5% of its entire investee company portfolio — by 2025. It will also gradually expand its responsible investment team, which now has five professionals.

KIC’s move comes as it strengthens its fiduciary duty to improve portfolio companies’ value over the mid-to long term. The state-run fund introduced a stewardship code in December 2018 to focus on portfolio companies’ corporate governance, risk management and performance.

The sovereign wealth fund will consider the investment value, environment, social and governance (ESG) management risks and potential growth of the companies during the selection process, sources said.

The target companies are likely to include those attacked by global activist investors, as well as tech giants, market watchers said. KIC had invested $1.8 billion in Apple Inc., $1.5 billion in Microsoft Corp., $670 million in Amazon.com Inc. and $487.3 million in UnitedHealth Group Inc. as of end-2022, according to its US Securities and Exchange Commission filing.

Meanwhile, KIC last year posted its largest annual loss since its founding in 2005. It saw a record shortfall of $29.7 billion in 2022 amid a poor performance of equities and bonds. Its annualized return was minus 14.4%, the worst percentage since 2008.

Assets under management plummeted from $205 billion — the world's 14th-largest for a sovereign wealth fund as of end-2021 — to $169.3 billion as of end-2022.

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

Jihyun Kim edited this article.