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  • Investment Philosophy & Policy


Investing assets entrusted by the government, Bank of Korea and public funds in the global financial market

Investment Philosophy & Policy

Investment Philosophy

KIC invests with a long-term perspective.

We pursue high returns through long-term investing, without being shaken by short-term market volatility.

KIC invests based on intrinsic value.

We identify undervalued assets through systematic valuation.

KIC invests based on
thorough risk assessments.

We stay one step ahead when it comes to risk management and invest only after a complete risk assessment.

We believe that…

  • Long-term investments generate better returns than short-term investments.
  • Asset allocation is key to determining a portfolio’s absolute return.
  • Diversified investing is an effective way to increase the risk-return ratio.
  • All investment targets must undergo a complete risk assessment, regardless of how promising they seem; we should be prepared for the worst and stay one step ahead in managing risk.
  • The stock market is inherently inefficient.
  • Research-based value investing can generate excess returns in light of market inefficiency.
  • External asset managers with a solid investment philosophy and expertise by asset class can generate stable returns amid external volatility.
  • System-based operations can lead to effective asset management and improve long-term investment performance.
  • Transparent and sound governance and strong teamwork are essential for generating sustainable investment returns.
  • Cost-effective management and controls are essential for increasing net added value.

Investment Policy

Investment Objective

KIC’s investment objective is to generate consistent and stable investment returns within appropriate risk limits to preserve and increase the value of Korea’s sovereign wealth. Investment Principles Based on principles of prudent and responsible investing, KIC diversifies investments across asset classes and regions, ensuring that overall portfolio risk remains within appropriate levels to increase returns in a sustainable manner.

Asset Classes

We invest in traditional and alternative assets. Traditional assets include listed or highly liquid financial assets such as equities and fixed-income investments. Alternative assets, which can capture risk premiums associated with illiquid investments, include private equity, real estate, infrastructure and hedge funds.

Investment Guidelines

The investment guidelines provided by our sponsors stipulate the objectives, benchmarks, risk tolerance limits and other key guidelines for mandated investments and serve as the basis for all investments, risk management and performance assessments at KIC. KIC has also established internal investment guidelines for all asset classes, including fixed income, equity and each fund type.

Asset Allocation

KIC uses asset allocation strategies based on financial market and asset class forecasts by investment horizon; these strategies are strategic asset allocation, strategic tilting and tactical asset allocation. Strategic asset allocation defines the role and function of each asset class and sets the policy portfolio based on expected returns and risks and optimal asset allocation on a long-term horizon. Strategic tilting, which entails a mid-term investment horizon, aims to increase investment returns by adjusting the asset allocation against the policy portfolio based on macro research for each asset class and country. Tactical asset allocation seeks investment opportunities stemming from relatively short-term market volatility.

Direct and Indirect Management

KIC manages traditional assets directly by trading in financial markets and indirectly through external managers. For direct investments, we pursue stable returns with relatively low risk and marginal excess returns compared to the benchmark. For indirect investments, we hire external managers with a proven track record in a region, strategy or asset to generate greater excess returns within a relatively high level of risk.

Risk Management

KIC minimizes unnecessary risk and controls downside risk through preemptive and systematic risk management. We set risk limits in accordance with risk management policies approved by the Steering Committee. Relevant departments regularly monitor risk limit compliance.