In its first strategic asset management alliance with a foreign firm, the biggest Korean life insurer has joined forces with $381 billion firm New York Life Investments, a move both see as offering significant international potential.
As a first initiative, Samsung Life and the US firm are developing the Samsung-US Dynamic Asset Allocation Fund, a $500 million joint strategy that is expected to hit markets at the end of September.
The fund – planned since mid-2013 – is a hybrid strategy involving investments in both US bonds and stocks, with each firm putting in $250 million. New York Life Investments will oversee the asset allocation strategies and bond investments in the US, while Samsung Life Investment America will run the equity portfolio.
The fund will mostly target Korean institutional and retail clients, “and hopefully we can try the international marketplace as well if the fund goes well”, says Koo Sung-hoon, chief investment officer of Samsung Life, which had $137 billion in AUM as of end-2012.
“Institutional clients are our main target,” he tells AsianInvestor. “For example, large pension funds that are looking to diversify further or add more international exposure to their portfolio.”
Samsung Asset Management will be in charge of launching and managing the deal, while the group’s subsidiaries, including Samsung Securities, will market it to institutions and private investors.
Moreover, in the near term the two firms say they will discuss joint investment possibilities in US real estate through cooperation between Samsung SRA Asset Management and New York Life Investments.
Koo adds that the Korean firm is interested in expanding the relationship further “when it appears beneficial and necessary for our asset management business”.
Samsung Life and New York Life say they will also establish “other joint initiatives in Asian asset management markets”. Asked to provide examples of what such initiatives might entail, Koo says: “We would like to leave it open for now, as our joint interests could evolve.”
The Korean firm expects to boost its asset management profitability through joint investment with New York Life Investments, which for its part has been seeking to establish business in Asian countries including Korea.
Samsung Life chief executive Keun-Hee Park and New York Life Investments CEO John Kim will run their respective sides of the partnership. Kim, a Korean-American appointed to his current role in 2008, is also CIO of New York Life Insurance, the largest mutual life insurance firm in the US.
The firms have maintained a business relationship for over a decade, with Samsung Life having entrusted management of overseas bonds to New York Life Investments in 2001.