AsianInvestor magazine has named South Korea's National Pension Corporation, steward of the $124 billion National Pension System, as Institutional Investor of the Year. The award was announced at the magazine's fourth annual black-tie dinner celebrating its 2005 Achievement Awards for fund management on Friday night, May 20.
Cho Koog-jun, executive director and CIO at NPC's fund management centre, accepted the award on behalf of the organization and his investment outsourcing team, led by Kwag Dae-hwan.
This is the second year that AsianInvestor named an Institution of the Year. Last year the award was won by the Hong Kong Jockey Club.
One of the rationales behind the award has been to identify and raise the bar for standards and best practices in Asia's asset management industry. By acting as a cheerleader, the magazine hopes to highlight when institutions are doing the right thing and give other investors an idea of what best practice is all about.
This year the magazine wanted to support a public pension fund that it deemed the most professional. Big, public institutions are often deemed to have a lot of problems. They may be badly run, or subject to political manipulation.
There is not often a lot of transparency. So too, those in charge of asset management are often bureaucrats who lack investment experience, and whose priority seems to be to avoid getting fired, rather than taking sensible risks to help members earn a reasonable return on their assets.
The NPC, however, has made a good start on investing its assets offshore in order to diversify out of the domestic market, which is far too small to give the NPC either the investment returns or risk protection it requires.
The NPC has been willing to pay for professional advice. It has given new fund managers clear investment guidelines and benchmarks, as well as reasonable timeframes. Most of all, its managers have comported themselves in a professional manner.
There are now moves in the legislature to spin off the fund management centre, thus creating some distance from the political pressures that can be intense. A lot of public institutions get investment wrong. On balance, the NPC seems to be getting things right.