The $78 billion National Pension Corporation of South Korea has declined to renew the contracts of two executives running its outsourcing team, Chang Kil-hoon and Lee Ki-hwan, the organization announced yesterday.
People close to the organization say the NPC was not satisfied with the officers' performance; a committee of senior executives made the decision. CIO KJ Cho, who joined the NPC in November, is expected to take this opportunity to revamp the outsourcing team with people of his own choice, whether they are hired from outside or moved from Cho's team.
The outsourcing team is responsible for allocating assets to external fund managers and custodians, both domestically and internationally, but the policy decisions are made by the CIO and the NPC's top brass.
Last year under Chang the outsourcing team appointed four fund houses (Capital International, Fidelity Investments, State Street Global Advisors and Wellington International Management) to run international equities money, its first-ever offshore investment. Volatile markets have led the NPC to put implementing those mandates on pause, but the fund managers and NPC insiders expect them to be put into action by the end of the year. The NPC's next international move is likely fixed income.
All of these moves may be held up, however, as Cho replaces the outsourcing team's executives over the summer and brings the new unit up to speed. Overseas outsourcing is politically sensitive and the NPC must ensure its first allocation is a success.