At a time when Asia Pacific’s pension funds need to modernise, expand and improve, having high calibre professionals in key roles will be vitally important.
For that reason, AsianInvestor has consulted leading pension fund experts, consultants, custodians and fund managers to put together a list of 20 pension executives who stand out in their field. The list which is being rolled out online over the next week and a half, is not ranked. Nor is it intended to be exhaustive. But hopefully it highlights why these particular executives in the region have so impressed their peers, business partners and colleagues.
You can also find out more about the rationale for our list. Today, we move on to executives from South Korea and Australia.
Chief investment officer, Korea Teachers' Credit Union, South Korea
The head of investment for Korea Teachers’ Credit Union is seen as one of the more progressive investing professionals in a country that has many state-linked pension funds, but relatively few innovators.
Consultants and fund professionals credit Kang Sung-Seog (pictured) with bringing a willingness to invest offshore and into unusual areas, which has helped drive a broader array of investments at the W29 trillion ($27.04 billion) fund.
“He spent many years in overseas investments, unlike many of his peers, and has made huge contributions to diversifying KTCU’s portfolio in both asset classes and regions,” said a senior investment consultant who works with Korean pension funds.
Kang, who has worked at KTCU for 30 years and been CIO since 2015, has also embraced into alternatives as CIO, switching increasing amounts of its assets from equities. As Kang put it, stocks are “unpredictable and subject to big losses,” while debt faces negative returns.
The pension fund has invested over 40% of its portfolio into alternatives, in areas including private equity, real estate, infrastructure and loans. And with a rising asset pool KTCU regularly strikes new deals. One example was in June last year, when it reportedly partnered with the Public Officials Benefit Association (see our profile of Jang Dong-Hun) and other Korean investors to put a combined W200 billion into Macquarie’s fourth North American infrastructure fund.
KTCU also teamed up with the Teachers Insurance and Annuity Association of America to invest into a £300 million ($335 million) fund of property fund manager TH Real Estate in July 2017, and personally struck a $1 billion partnership with the fund house to buy into US real estate loans in January. The same month KTCU committed $50 million to a Dyal Capital Partners fund, which makes equity investments into private equity funds. Kang reportedly said he wants the fund to raise overseas property investments by W600 billion this year, to W3.8 trillion.
KTCU is often an anchor investor in alternative investments. This, combined with its thorough due diligence process, means its involvement is often seen as a mark of quality for investments.
“Many follow-on investors in Korea take it as a relief if the opportunity is vetted by KTCU and approved,” said the consultant.
Chief investment officer, Sunsuper, Australia
Over the past several years Sunsuper has impressed on three fronts: enviable rates of growth among its core super funds, consolidating other funds (including a A$3 billion ($2.28 billion) merger with Melbourne-based industry fund Kinetic Super), and strong member engagement as it seeks to become a top-six player.
Observers credit both CIO Ian Patrick, who joined in November 2015 from a 13-year career with Jana Investment Advisors, and CEO Scott Hartley. We named Sunsuper our top institutional investor for Australia and New Zealand last year, noting that with A$46 billion in assets it’s the country’s ninth-largest super fund, and the fastest growing. Its stated ambition is to become a top six player.
Part of its success is down to impressive rates of return. Its balanced option returned 12.3% for the year to June 2017, ranking it fifth in a field of 60 peers. It outperformed other heavyweights such as UniSuper, Cbus and Rest. Meanwhile its five-year returns of 10.9% was in the top 15 funds.
“Ian has ensured that Sunsuper remains among the top 10 of industry funds even as the organisation has grown through mergers,” noted the head of institutional coverage for Australia. “It’s enjoyed very good investment performance relative to its peers, which is largely down to Ian.”
The super fund is continuing to diversify, and Patrick and head of alternatives Bruce Tomlinson aim to raise its exposure to hedge funds and alternative assets from A$2 billion to A$3 billion by 2020. To do this Patrick has gifted Tomlinson’s team more resources to internalise the investment work.
But Patrick doesn’t believe in alternatives alone as a fillip to returns. He has said in interviews that Sunsuper must focus on remaining vigilant over its investment processes, keep enough portfolio diversify in a time of high market valuations, and seek pockets of risk that can offer returns within frothy markets. Plus he emphasises the importance of keeping members informed of the need to save for retirement.
The ability of Patrick’s team to do so while while Sunsuper’s asset pile continues to expand is testament to his effective leadership.