Better Returns
Alternative assets accounted for about 49 percent of POBA’s total assets. Such investments were the best-performing asset class last year for South Korea’s biggest investor National Pension Service. NPS returned 12.34 percent on overseas alternative investments in 2016, compared with 1.83 percent on its domestic bond holdings.
POBA is focusing more on senior or mezzanine debt rather than equity investments across asset classes such as infrastructure and real estate assets, as it’s hard to expect capital appreciation in mature markets, Jang said. The fund has invested in overseas infrastructure debt.
“Because we manage retirement funds, we’ll need to look for assets with fewer downside risks,” Jang said. “We’ll keep looking into investment opportunities in various asset classes that can offer stable cash flows while studying how global pension funds are coping in the low-rate environment.”
This article was provided by Bloomberg News.