TLDR:
- Korea’s POBA is renewing its investment strategy to focus on income generation and private credit.
- They are adopting a barbell approach, with 70-80% allocated to income-generating assets and 20-30% to equity investments.
The Korean Public Officials Benefit Association (POBA) has recalibrated its investment strategy to prioritize income generation and include private credit in a barbell approach. The Chief Investment Officer, Huh Jang, highlighted five key investment themes for 2024. POBA aims to allocate 70-80% of its portfolio to income-generating assets like fixed income and private credit, which offer stable dividends. The remaining 20-30% will be dedicated to equity investments in public and private markets and venture capital for long-term growth.
POBA’s focus on private credit is a key component of their strategy for 2024. Huh emphasized the risk-adjusted returns and stability of private credit compared to public fixed income. In addition, POBA plans to capitalize on the rise of artificial intelligence (AI) by expanding its equities portfolio. They see opportunities in sectors like tech, semiconductors, and AI-related infrastructure.
As of the end of 2023, the majority of POBA’s portfolio was in alternative investments, with private equity being a strategic focus for 2024. The pension fund also prioritized real estate but is looking beyond traditional office assets to niche sectors like student housing and nursing homes. Investing in listed real estate investment trusts (REITs) is also part of their real estate strategy.
