Korea’s Government Employees Pension Service (GEPS) has seen its chief investment officer step down to become chief executive at local fund house Hi Asset Management.
Choi Young-Gwon will start in his new role on April 1, replacing Rhee Jeung-Cheol, who had been CEO of Hi AM since 2011. AsianInvestor could not ascertain Rhee's next destination.
Hi AM, a subsidiary of Hyundai Heavy Industry Group, has $10 billion under management, according to Korea Financial Investment Association data.
State retirement fund GEPS, which aims to increase its AUM from $5.5 billion to $8 billion by 2020, is understood to have started the process of hiring another CIO, but has not announced details of the process as yet.
Choi had started a two-year term at GEPS in July 2014 and was granted a one-year extension last year; he drove major changes in asset allocation and investment strategy at the fund.
It is typical for senior officials at public institutions to serve for fixed terms and then move on. Three years is typically the longest tenure, even when they are seen to have performed well, as in Choi's case.
However, AsianInvestor has suggested that a decision to switch or retain personnel should be based on performance rather than an automatic changing of the guard. Korea’s rotation system for senior managers is holding back the development of professional leaders with institutional or market specialist knowledge, and fostering a bureaucracy that is motivated by short-term career risk, argued Jame DiBiasio in the AsianInvestor article in January last year.
Choi has worked at an asset management firm previously; prior to joining GEPS in 2014, he was CIO of Plus Asset management. He started his career at Korea Investment Trust in 1989 and has also worked at Tong Yang Orion Investment Trust, Jeil Investment Trust and KB Trust.
Choi had overseen GEPS' diversification into more international and alternative investments and its adoption of a longer-term investment horizon.
The fund plans to double its foreign asset exposure to 30% by 2020 from 16% in 2015, with a view to boosting returns. It is also shifting money from domestic active equity funds into domestic passive investments, but increasing its use of active managers to obtain foreign exposure. For instance, last year GEPS moved to hand out its first mandate for private equity secondaries.
The investment portfolio last year comprised 49% bonds, 35% stocks and 16% alternative assets and is targeting a ratio of 5:3:2 for those asset classes on a medium- to long-term horizon.
There are various examples of individuals switching between the public and private investment industries in Korea, as Choi has done. Lee Yoon-Pyo, formerly head of investment strategy at Korea's National Pension Service, joined Truston Asset Management of Korea as co-CEO last year to oversee the alternative investments division.