Korea’s SWF Posts 11.83% Return for 2012

The Korea Investment Corporation (KIC) posted an 11.83% return on investment for 2012. The KIC topped the benchmark yield of 11.17%. The KIC posted a net asset value of $56.6 billion for 2012.

The negative effects of deleveraging in developed economies have lowered return expectations for sovereign funds and some public investors.

Sovereign funds have generally low expectations for fixed income and some equity markets for the next couple of years, which show the move towards alternative asset classes like real estate and private equity.

Exposure in private markets for the KIC is targeted toward 20 to 25%. In July 2009, the KIC launched their indirect private market program, which allowed investments in private equity, real estate, infrastructure, and hedge funds. Almost a year later in June 2010, the direct investment program was pushed forward, allowing the KIC to pursue direct energy and natural resource cross border deals. Some overseas deals in 2012 include purchasing landmark real estate in Europe.

In 2005, the Korea Investment Corporation was established to manage a portion of Korea’s foreign reserves and to contribute to the development of Korea’s domestic finance industry. The KIC is prohibited by law from investing in Korean assets.

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