Korean Teachers’ Credit Union (KTCU) reported a return of nearly 7% in the first half of 2020 by investing in alternative assets, up from 6.6% a year ago, offsetting the fallout from the Covid-19 pandemic.
KTCU reported a return of 5.4% during the first six months of this year by investing in equities, bonds, alternative investments and short-term funds on a consolidated basis, according to the pension fund’s regulatory filing on August 28. Its return fell by 0.9% points compared to the same period last year but its performance was quite positive given the Covid-19 pandemic this year, market watchers said. By asset classes, KTCU took a 2.5% return from equities, 4.3% return from bonds and 6.9% return from alternative investments respectively.
The pension fund’s investment in alternative assets was particularly positive among all asset classes. Its alternative investments accounted for over 55% of its total assets as of the end of June, which has been in a range between 48.6% and 57.5% over the past three years. The pension fund has pursued a stable fund management by maintaining its allocation to alternative assets steady at around 50%.
Within the alternative assets, 23.2% was invested in domestic assets while 32% was invested abroad. By asset type, overseas real assets accounted for the largest share (40.4%) of KTCU’s total alternative investments during the first half of this year. Overseas real assets include infrastructure such as real estate and social overhead capital (SOC). Real estate took up 26.9% while SOC accounted for 13.5% of its overseas real assets. Overseas financial assets, which consist of private equity and private debt, accounted for 17.6% of the total overseas real assets.
KTCU’s overseas real asset investments returned 9.7% in the first half of this year, the highest among the entire alternative assets. It was also higher than the pension scheme’s return on domestic real assets of 5.2%. Investment in overseas financial assets returned 4.9% during the same period. During the first six months of 2019, KTCU reported a return of 6.2% and 11.1% by investing in overseas real assets and financial assets respectively.
Investment in domestic financial assets, including private equity fund, venture capital and loans registered a return of 5.1%. Investments in PEF, VC and loans accounted for 12.7%, 0.9% and 2.7% respectively in the assets. (Reporting by Hye-ran Kim)