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First entrusted with USD 1 billion in 2006, KIC has consistently expanded its operating scale through stable and capable management. Our assets under management (AUM) at the end of 2021 totaled USD 205 billion on the back of excellent investment performance, marking a 12% increase from 2020.
Following a principle of diversification, KIC manages a portfolio that is 82.5% traditional assets and 17.5% alternative assets, including private equity, real estate, infrastructure and hedge funds.
The AUM of our alternative assets, which have a low correlation with traditional assets and pursues relatively high returns, grew 29% (USD 8 billion) to USD 35.9 billion, corresponding to their growth in portfolio weight from 15.3% in 2020 to 17.5% in 2021.
| NAV | Weight | ||
|---|---|---|---|
| Traditional assets | Equities | 83.2 | 40.6 |
| Fixed Income | 71.6 | 34.9 | |
| Other* | 14.3 | 7.0 | |
| Subtotal | 169.1 | 82.5 | |
| Alternative assets | Private equity | 15.7 | 7.7 |
| Real estate & infrastructure | 13.4 | 6.5 | |
| Hedge funds | 5.5 | 2.7 | |
| Cash equivalents | 1.3 | 0.6 | |
| Subtotal | 35.9 | 17.5 | |
| Total | 205.0 | 100.0 | |
KIC has increased investments in alternative assets to achieve stable long-term performance. Alternatives accounted for 17.5% of the total portfolio in 2021, up from 15.3% the previous year.
As new Covid-19 infections began to wane with vaccine rollouts in major developed economies in early 2021, increased consumption following economic reopening and large-scale economic stimulus across countries raised recovery expectations, leading to higher risky asset prices. But supply chain bottlenecks caused by the sudden post-pandemic increase in demand and supply shortages, as well as concerns around inflation due to rising prices for commodities and more, increased global financial market volatility. While stocks remained overvalued, improved corporate performance and earnings drove a rise in stock prices. On the fixed-income front, bond yields rose (and bond prices fell) on upward inflationary pressures and economic recovery trends.
Stock prices on the MSCI World Index rose 16.8% and indices in major regions excluding China also closed higher than they did at the beginning of the year. Bond prices on the Bloomberg Barclays Global Aggregate Bond Index rose 4.7% due to lower base rates and increased asset purchases.
KIC recorded an annual return of 9.13% in 2021 through actively responding to changes in the financial environment and effectively using its global investment and crisis management capabilities. Assets under management increased by USD 22 billion, from USD 183.1 billion at end-2020 to USD 205 billion at end-2021. Our five-year annualized return was 9.94% and our annualized return since inception, 5.47%.
(USD billion)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Total assets* | 115.8 | 136.7 | 137.1 | 161.3 | 188.1 |
| NAV | 134.1 | 131.6 | 157.3 | 183.1 | 205.0 |
| Cumulative net investment income | 34.1 | 29.0 | 49.2 | 71.0 | 87.9 |
* Previous year-end NAV + investments in 2021
(USD billion)
KIC’s return on total assets in 2021 stood at 9.13%, with a five-year annualized return of 9.94% and an annualized return since inception of 5.47%.
(%)
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Return on total assets (before fees) | 16.42 | -3.66 | 15.39 | 13.71 | 9.13 |
| Return on total assets (after fees) | 16.26 | -3.80 | 15.21 | 13.52 | 8.94 |
| Annualized return since inception | 4.45 | 3.76 | 4.60 | 5.22 | 5.47 |
The return on traditional assets in 2021 was 6.75%, -39 bps compared to the benchmark.
(%)
| 2017 | 2018 | 2019 | 2020 | 2021 | Annualized return for the past five years (’17-’21) | Annualized return since inception | ||
|---|---|---|---|---|---|---|---|---|
| Total | Return | 16.71 | -5.64 | 16.62 | 14.62 | 6.75 | 9.46 | 5.67 |
| Excess return (bp) | 129 | -81 | 33 | 144 | -39 | 32 | 22 | |
| Equities | Return | 25.50 | -9.55 | 27.52 | 19.16 | 18.61 | 15.39 | 6.41 |
| Excess return (bp) | 122 | -71 | 6 | 261 | -92 | 39 | -1 | |
| Fixed income | Return | 8.00 | -1.32 | 7.53 | 9.88 | -4.62 | 3.73 | 3.76 |
| Excess return (bp) | 72 | -13 | 73 | 78 | 39 | 48 | 33 | |
Annualized return since inception: 8.83%
(%)
| Inception | Annualized return since inception | |
|---|---|---|
| Private equity | 2009. 09. 16 | 11.33 |
| Real estate & infrastructure | 2010. 03. 15 | 7.76 |
| Hedge funds | 2010. 01. 29 | 5.64 |
| Alternative asset total* | 8.83 |
* Total includes commodities (categorized as traditional assets since April 2011)
| Asset class | Type | Benchmark |
|---|---|---|
| Traditional assets | Equities | Morgan Stanley Capital International All Country World Index ex Korea (unhedged) |
| Fixed income | Bloomberg Barclays Global Aggregate Index ex KRW ex Korea (unhedged) | |
| Inflation-linked bonds | Bloomberg Barclays Global Inflation-linked Bond Index | |
| Cash | ICE BofA Merrill Lynch 3-Month US Treasury Bill | |
| Alternative assets | Private equity | Morgan Stanley Capital International All Country World Index ex Korea (unhedged) + 2%, 3 months lagged |
| Real estate & infrastructure | G7 inflation rate + 4%, 3 months lagged | |
| Hedge funds | BofA Merrill Lynch 3-Month US Treasury Bill + 3.5%, 1 month lagged |
