Report: Korea’s military fund ups alternatives target

The $8bn Military Mutual Aid Association is going deeper into alternatives and investing more overseas.

South Korea’s Military Mutual Aid Association (MMAA), the defence ministry’s $8 billion fund, will increase its alternatives allocation to up to 25 percent by 2020 from its current level of 23 percent, according to a report by The Korea Herald.

The MMAA would also “increase the proportion of overseas investments from 23 percent to over 30 percent next year, mainly investing in private equity, private debt and tangible assets such as air carriers and real estate,” Lee Sang-ho, chief investment officer of MMAA, reportedly told the paper.

The MMAA has invested in alternatives since it was founded in 1984. It allocates approximately 15-20 percent of its overall portfolio to private equity funds including the Macquarie Group, Hastings Fund Managemeent and STIC Investments, according to PEI Research & Analytics.

In May, it invested KRW 50 billion ($43 million; €38 million) in a global infrastructure fund managed by Canada-headquartered Brookfield Asset Management. Last year, it put up about $30 million into collateralised loan obligations by The Carlyle Group and BlackRock.

The MMAA serves as a savings programme which provides education, healthcare and disaster relief for its 170,000 military service personnel and associated civilian employees. It has five subsidiary funds: the Korea Real Estate Investment Trust, Mplus Asset Management, lease financing firm Hankook Capital, defence and civilian facility manager Kongwoo EnC and military food and clothing maker Mplus F&C.

The MMAA could not be reached for comment.