Korea Post’s $65 billion savings bureau has invited large offshore investment managers to pitch for a global tactical asset allocation (GTAA) mandate.
The size of the mandate is as yet undecided, AsianInvestor understands. But applicants need to have more than $200 billion in overall assets under management, which is unusually large and will narrow the field considerably.
The savings bureau is seeking multi-asset-class absolute return strategies that add value via strategic and tactical asset allocation rather than individual security selection. Global macro hedge fund strategies won’t be considered.
Assets classes include equity, fixed income and alternatives, although the latter should be evaluated on a daily basis. Balanced equity/fixed income funds also won’t be considered.
The request for proposals was issued last Friday by Korea Investment Management (KIM), sole adviser on overseas alternative investments for Korea Post’s savings bureau.
The mandate will be awarded via a discretionary contract between the winning manager(s) and KIM, whose onshore domiciled fund of funds will invest in the offshore manager’s GTAA fund.
KIM will be responsible for onshore fund set-up, onshore operation, portfolio risk monitoring and currency hedging (US dollar-Korean won).
Daily position information for the monitoring of the invested portfolio should be provided via Bloomberg’s portfolio and risk analytics system.
Fund liquidity for redemptions needs to be at least quarterly with no hard lock-ups, and managers should provide monthly official net asset value figures.
Not only must applicants have at least $200 billion in AUM, but they also need a 10-year operating history. Their GTAA strategy itself needs to have more than $10 billion in assets with a minimum track record of seven years.
The selection process is as follow: RFP submission by 5pm (Korea Time) on October 14; first evaluation (quantitative screening) on October 17; second evaluation (presentation and Q&A) for due diligence of candidates, with the date as yet undecided. On-site due diligence and final selection notice will follow.
Applicants should submit four hard copies of their investment proposal by 5pm on October 14 (Korea time) describing both the firm and the fund (English version in freestyle format) by mail or in person to the global investment strategy management department, Korea Investment Management, 16F, 88 Uisadang-daero, Yeoungdeungpo-gu, Seoul, Korea, 150-745.
Applications should cover investment strategy, portfolio construction (historical exposure by sub-strategies, asset types) and risk management processes and main point of contact.
After the first evaluation, second round candidates will be notified and asked to submit supporting documents.
Korea Post has two financial service bureaus: postal savings and postal insurance, both under the management of the ministry of science, ICT and future planning. Postal savings manages around $65 billion and postal insurance $30 billion.