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POBA to diversify its alternative investment portfolio

The South Korean public pension fund seeks higher risk-adjusted returns by adjusting its approach to alternative assets.

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Institution: Public Officials Benefit Association
Headquarters: Seoul, South Korea
AUM: $11.0bn
Allocation to alternatives: 58.0%

The Public Officials Benefit Association plans to change its alternative investment portfolio to achieve higher risk-adjusted returns. The firm will consider blind-pool funds managed by global investment firms which it has built track records with before, and it will source deals through joint ventures and separately managed accounts with other global pension funds, instead of relying on domestic management firms and individual project-based investment.

For private equity, the firm would commit to major management firms including pensions and retirement funds, at around KRW200 to 300 billion ($177.2 million – $265.7 million; €156.8 million – €235.2 million) every year.

As illustrated in the charts below, the $11.0 billion South Korean public pension fund has a 58.0 percent target allocation to alternative investment.

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