The Police Mutual Aid Association (PMAA) of Korea is looking to go global for its investments next year.
PMAA was established in 1989 to provide pension benefits to over 93,000 police service personnel and related civilian members. It is also involved in managing businesses that provide welfare benefits to its members.
It is similar in structure and operations to other welfare associations, such as Korea Teachers Credit Union, Public Officials Benefit Association and the Military Mutual Aid Association.
While smaller than its peers with $1.3 billion of assets, it is fast growing in size: PMAA’s asset size was a mere $10 million in 1989.
Of that, 53% is invested in financial assets, including cash, bank deposits, short-term notes, corporate bonds, commercial paper and some derivatives, including equity-linked and debt-linked notes. A further 40% is in real estate, including holdings in commercial property, funds and real-estate investment trusts. The remainder is lent to members.
Today the entire portfolio is domestic, but Lee Sung-yeon, chief director of business development at PMAA, says this is insufficient to meet the group’s annual target return on investment of 7%.
“We normally target higher than 7% returns from real estate, but it is getting harder to achieve this,” he says. Domestic interest rates and yields continue to decline, pushing PMAA to look overseas.
The fund is at the beginning stages of this process. “We are open to speak with overseas asset managers, public and private equity funds, including global real estate,” Lee says. PMAA would be most comfortable with club deals involving other Korean institutions.