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| Korea Investment Corporation (KIC) CEO Choi Hee-nam speaks during a press conference at a restaurant in Seoul, Thursday. / Courtesy of KIC |
Sovereign wealth fund to open San Francisco office in Q3
By Park Jae-hyuk
The Korea Investment Corp. (KIC) will open a San Francisco office in the third quarter of this year to enhance its competitive advantage through investments in high-tech Silicon Valley startups, the head of the nation's sovereign wealth fund said Thursday.
"This is intended to set up an outpost for more alternative investments along the west coast of North America," KIC CEO Choi Hee-nam said at a press conference in Seoul.
"Instead of pursuing our previous strategy of expanding presences in international financial hubs, we will seek a new localization strategy tailored for alternative assets."
The KIC has branches in New York, London and Singapore.
It will send two employees to the San Francisco office that will be under supervision of the New York branch.
The institution aims to boost its ties with pension funds, general partners and asset management companies in California for better access to information about promising startups in Silicon Valley.
"We will reduce the information gap resulting from information asymmetry and will come up with practical measures for the Korean financial industry's development," Choi said.
Amid the global trend of low interest rates and falling growth rates, sovereign wealth funds worldwide have looked to Silicon Valley for new income sources, instead of conventional assets.
Realizing the Malaysian sovereign wealth fund has already sent workers to San Francisco, the KIC has hastened to open an office there.
A KIC official said a local office is needed near Silicon Valley.
"Our New York branch is too distant from the region," KIC chief risk officer Yoo Chang-ho said. "It has been difficult for us to join Silicon Valley's inner circle having special information."
During the press conference, the KIC also said it will use algorithm-based quantitative investment strategies this year, utilizing artificial intelligence and big data analysis.
It aims to establish a high-performance system for quantitative analysis by the first half of this year.
The system will enable handling of large data and algorithms for quantitative investment strategies based on new technologies, such as big data and machine learning.
The KIC also vowed to help Korean asset management companies and securities firms expand globally by forming partnerships with them.
It also promised to make responsible and sustainable investments, according to three key factors ― environmental, social and corporate governance.
As of the end of 2019, the sovereign wealth fund had $157.3 billion of assets under management. It earned $20.2 billion last year from its investments, with a 15.39 percent rate of return.
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