Korean MMAA considers best income plans to increase investments in foreign stocks
Military Mutual Aid Association (MMAA), one of the largest public funds in South Korea with 12.7 trillion won under management and profit in sight this year, plans to increase the share of foreign stocks to 50 percent in its investment portfolio and to increase investments in environmentally friendly projects. , future mobility and organic assets, according to its investment director (CIO).
The association’s strategy centers on “inter-regional and market-driven investments,” CIO Lee Sang-hee told the Mail Business Newspaper in an interview.
The fund will increase the share of foreign stocks from 42% to 50% currently and increase investments in exchange-traded funds (ETFs) and ETF-managed portfolio funds (EMPs) to improve safety.
For alternative investments, it will focus on short-term income-producing assets but keep a keen eye on promising sectors such as eco-friendly businesses, future mobility and bio-industries.
Infrastructure assets in South Korea and the United States that generate stable, long-term cash flow are the best investment option, as the impending weakening in the United States would make many companies cash-strapped. economically unsustainable, he said.
Lee has been spearheading investments in the fund since May of this year for a three-year term. He led the Strategic Investment Team, Equity Investment Team and New York Branch of Samsung Life Insurance before joining Lotte Non-Life Insurance to oversee all asset management activities.
He is responsible for managing 5.5 trillion won ($ 4.6 billion) of assets in the form of bonds, stocks and alternative investments within the association. MMAA has a total of 12.7 trillion won under management.
The association raked in 150.3 billion won of net income in 2020, the highest since 2008 despite market shocks from Covid-19. Its financial statements have been in the dark for five consecutive years since 2016. Its net profit in the first six months of the year hit a 10-year high at 175.5 billion won.
This strong performance is in part due to the significant gains resulting from the successful withdrawal of private equity funds. âA series of successful sales and initial public offerings (IPOs) from large companies, including Job Korea, Hybe, Yanolja and Myungshin Industry, have given us five to seven times the returns,â he said.
Aggressive investments with new funds worth 1.54 trillion won via sales of underperforming companies also paid off, he said.
The association is expected to achieve the best profits on record by the end of this year. âWe estimate that the return on equities would reach 13.2%, bonds 2.8% and alternative and real estate investments 6% by the end of this year, which would help us achieve the highest net income on record of 180 billion won to 210 billion won and a surplus. operation for six consecutive years, âhe said.
By Kang Doo-soon, Ahn Gab-seong and Choi Mira
[â Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]