KIC_2024

MESSAGE FROM THE CEO

Welcome and thank you for visiting the Korea Investment Corporation (KIC) website. KIC, the sovereign wealth fund of Korea, was established in 2005 to efficiently increase national wealth and help develop the domestic finance industry. We built Korea’s global investment infrastructure at a time when overseas investments in the country were still new. Today, we manage a diverse portfolio that spans equities, fixed income, real estate, infrastructure and private equity. Over the years, and through multiple financial crises, KIC has pursued better returns through committing to a principle of long-term, diversified investing. As of the end of 2020, we manage more than KRW 200 trillion and stand alongside the world’s leading sovereign wealth funds.

Over the years, and through multiple financial crises, KIC has pursued better returns through committing to a principle of long-term, diversified investing. As of the end of 2020, we manage more than KRW 200 trillion and stand alongside the world’s leading sovereign wealth funds. In a rapidly changing investment environment and an increasingly uncertain financial market, our priority is to lay the groundwork for higher returns through responding with agility and resilience. We also want to make a difference.

Considering the positive impact we can have with our diverse portfolio and sizeable assets, we will take the lead in ESG and execute responsible investments that contribute to a more sustainable global economy. We will also use our overseas investment knowhow and global network to lead the international investments of domestic public funds. Through supporting them in every way we can, we will be a partner to Korea’s finance industry.

We built Korea’s global investment infrastructure at a time when overseas investments in the country were still new. Today, we manage a diverse portfolio that spans equities, fixed income, real estate, infrastructure and private equity. Over the years, and through multiple financial crises, KIC has pursued better returns through committing to a principle of long-term, diversified investing. As of the end of 2020, we manage more than KRW 200 trillion and stand alongside the world’s leading sovereign wealth funds. In a rapidly changing investment environment and an increasingly uncertain financial market, our priority is to lay the groundwork for higher returns through responding with agility and resilience. We also want to make a difference.

Finally, my staff and I remain dedicated to growing Korea’s national wealth for future generations. We will honor your trust in us through investing with integrity. I ask for your continued support as we strive to become a leading sovereign wealth fund and a central player in Korea’s future economy. We will also use our overseas investment knowhow and global network to lead the international investments of domestic public funds. Through supporting them in every way we can, we will be a partner to Korea’s finance industry.

Finally, my staff and I remain dedicated to growing Korea’s national wealth for future generations. We will honor your trust in us through investing with integrity.

I ask for your continued support as we strive to become a leading sovereign wealth fund and a central player in Korea’s future economy.

Thank you.

Il Young Park

Chairman & CEO

Korea Investment Corporation

INVESTMENT HIGHLITHTS

Traditional Investments

Traditional assets make up the core of KIC's investment portfolio and consist of equities, fixed income, and other assets.

They play a pivotal role in achieving KIC's investment objectives.

Since 2019, KIC has held an asset allocation forum every quarter that is attended by investment and risk management managers from throughout the organization to discuss the allocation and risk management of assets across the portfolio. Discussion results are actively incorporated into KIC’s investment decision-making process.

Based on financial market outlooks and asset class analyses, we derive expected returns for each asset class and conduct optimal asset allocation that takes into account enterprise risk management levels.

Alternative Investments

KIC invests in alternative assets, including private equity, real estate, infrastructure, hedge funds, and private debt.

Alternative investments help diversify overall portfolio risk and sources of return, contributing to KIC’s strong long-term performance.

Alternative assets refer to assets other than those traded in public markets, such as equities and fixed income. They are characterized by a relatively longer investment horizon and lower liquidity than traditional assets. They also capture an illiquidity premium and have

a different risk-return structure than do traditional assets, resulting in a low correlation with those assets. As a result, alternative assets can lower portfolio risk and diversify sources of return.

KIC began investing in alternative assets in 2009 with private equity

and later expanded into real estate, infrastructure, hedge funds, and private debt.

Traditional Investments

Traditional assets make up the core of KIC's investment portfolio and consist of equities, fixed income, and other assets.

They play a pivotal role in achieving KIC's investment objectives.

MILESTONES 2005-2025

INVESTMENT POLICY & PROCESS

KIC’s investment policy and processes focus on boosting long-term returns through the stable

management of assets entrusted by the Korean government, Bank of Korea and public funds.

Investment Policy

KIC’s investment objective is to generate sustainable and stable investment returns within appropriate risk limits to preserve and increase the value of Korea’s sovereign wealth.

Investment Principles

Based on principles of prudent and responsible investing, KIC diversifies investments across asset classes and regions, ensuring that overall portfolio risk remains within appropriate levels to increase returns in a sustainable manner.

Asset Classes

KIC invests in traditional and alternative assets. Traditional assets include listed or highly liquid financial assets such as equities and fixed-income investments. Alternative assets, which can capture risk premiums associated with illiquid investments, include private equity, real estate, infrastructure and hedge funds.

Investment Guidelines

The investment guidelines provided by our sponsors stipulate the objectives, benchmarks, risk tolerance limits and other key guidelines for mandated investments and serve as the basis for all investments, risk management and performance assessments at KIC. KIC has also established internal investment guidelines for all asset classes, including equity, fixed income and each fund type. Risk management and performance assessments at KIC. KIC has also established internal investment guidelines for all asset classes, including equity, fixed income and each fund type.

Asset Allocation

KIC is strengthening the role and function of asset allocation in consideration of financial market conditions, the characteristics of each asset class, investment horizon and other factors to achieve its investment objective. We hold an asset allocation forum every quarter to integrate top-down and bottom-up views from various investment departments and formulate a house view to ensure a reliable asset allocation process. KIC’s asset allocation system consists of strategic asset allocation, strategic tilting and tactical asset allocation, which are implemented according to investment horizon and role.

Strategic asset allocation defines the role and function of each asset class and sets the policy portfolio based on expected returns and risks on a long-term horizon. Strategic tilting aims to increase returns by adjusting asset allocation against the policy portfolio on a mid-term horizon. Tactical asset allocation

pursues excess returns through using alpha strategies and managing risks via various hedging strategies in the event of short-term market volatility.

Direct and Indirect Asset Management KIC manages traditional assets directly by trading in financial markets and indirectly through external managers. For direct investments, we pursue stable returns with relatively low risk and marginal excess returns compared to the benchmark. For indirect investments, we use a more active investment strategy that pursues high excess returns with relatively greater risk.

Direct and Indirect Asset Management

KIC manages traditional assets directly by trading in financial markets and indirectly through external managers. For direct investments, we pursue stable returns with relatively low risk and marginal excess returns compared to the benchmark. For indirect investments, we use a more active investment strategy that pursues high excess returns with relatively greater risk.

TRADITIONAL ASSETS

Traditional investments, which make up the core of KIC’s investment portfolio, consist of equities,

fixed income and asset allocation. They play a pivotal role in achieving KIC’s investment objectives.

Traditional investments, including equities and fixed income, account for 77.2% of KIC’s total portfolio, playing a central role in our pursuit of investment targets.

We started with fixed-income investments in 2006 and expanded our asset classes to include equities, inflation-linked bonds and more. The annualized return for KIC’s traditional investments as of 2022 was 4.06%.

As the scope and scale of our investments grew, so did the need to adjust our asset class weights and to pursue companywide risk management.

Since 2019, our investment managers have been regularly engaging in in-depth discussions through KIC’s Asset Allocation Forum, the results of which are actively taken into account in our investment decision-making.

Each investment group aims to generate excess returns through using a wide range of strategies. The Asset Allocation Group derives the expected rate of return for each asset class based on the financial market outlook and determines optimum allocations in consideration of companywide risk levels, contributing to the achievement of KIC’s absolute return targets.

Through various functions, KIC maximizes the effectiveness of investment diversification and maintains portfolio-wide risk at appropriate levels, which helps generate returns in a sustainable manner.

STEERING COMMITTEE

The Steering Committee comprises six professionals from the private sector and three ex-officio members. The ex-officio members are the Minister of Economy and Finance and the Governor of the Bank of Korea as representatives of institutions that have entrusted KIC with assets exceeding a set amount, and the CEO of KIC. Private sector members are nominated by the Civil Member Candidate Nomination Committee, appointed by the President of the Republic of Korea and serve a two-year term. The chairman of the Steering Committee is elected from among the private sector members.