2020 was a milestone year for KIC marking the 15th anniversary of our founding. So before we turn the page and start looking back, I’d like to begin by saying thank you.
Your support has enabled KIC to grow and fulfill our mission to increase Korea’s national wealth and help advance the domestic finance industry.
Now, onto 2020 – and the global economic challenges brought by the Covid-19 pandemic. Lockdowns worldwide led to a recession worse than what we saw in the global financial crisis of 2007-2008 and that was, in fact, the worst recession since the Great Depression.
Governments and central banks responded with aggressive monetary and fiscal policies to increase liquidity on a massive scale. This stabilized financial markets and led to sharp increases in stock and bond prices.
In this fast-changing macro- and financial-market environment, KIC responded by strengthening our management strategies – namely, through expanding our active asset allocation strategy and long-term concentrated investment strategy. This approach worked.
In a year of unprecedented uncertainty, we were able to achieve exceptional performance. We earned USD 21.8 billion in gains, which made for a 13.7% return on total assets and a relative return of +144 bps for traditional assets. We now manage total assets of USD 183.1 billion (approximately KRW 200 trillion), which is almost twice what it was five years ago.
Now, it’s time to look ahead. While central bank and government policies last year aimed at overcoming the global health crisis, this year the focus will be on revitalizing policies for economic recovery.
In the second half of 2021, the global economy is expected to recover to pre-pandemic levels, though the situation will vary by region. But upside and downside risks remain. Inflationary pressures, global debt stress and geopolitical tensions are among the risks that can increase volatility in the global economy.
In this environment, KIC’s plan is to closely monitor market conditions and always be ready to respond.
Our priority is to be agile and flexible in a fast-changing market and in this “new normal” investment environment that has come to feel more normal post-Covid.
We will strengthen our optimized equity and fixed-income strategies and look for opportunities to invest in promising alternative assets, which will only make us better investors across asset classes.
We will shift our investment strategy to focus more on technologies and venture capital through our new San Francisco office, which we opened in 2021.
As a global investor and sovereign fund representing Korea, we will also respond to the global call for sustainability. Responsible investments are no longer an option, but a requisite, so we will continue being proactive about making a difference. We will also work with global investors to tackle issues including climate change while protecting the value of our investments.
Lastly, we are dedicated to partnering with Korea’s finance industry in every way we can – whether it’s through offering domestic investors opportunities to participate in KIC’s overseas investments and become more globally competitive, sharing joint investment opportunities or providing investment information.
In other words, despite the unknowns ahead, we will embrace challenges and strive to innovate. Because as the physical chemist and Nobel laureate Ilya Prigogine said, “The future is uncertain… but this uncertainty is at the very heart of human creativity.”
Chairman of the Board & CEO
Korea Investment Corporation