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Korea’s Yellow Umbrella opens tender for 600 billion won bond mandate

Yellow Umbrella
By Hui Ching-hoo   
January 11, 2021

South Korea’s government-sponsored Yellow Umbrella Mutual Aid Fund, which supports growth and development of small and mid-sized enterprises, is looking to hire four domestic fund managers for a 600 billion won (US$546 million) foreign bond mandate.

The managers will be appointed for three-year terms.

“The mandate is aimed at extracting yield from undervalued overseas fixed income sectors under the ultra-low interest rate environment,” Yellow Umbrella says in its request for proposal published on the website of the Korea Financial Investment Association on January 8.

Applicants must have a minimum three-year track record in foreign fixed income investments, with at least 10 billion won of total assets in their foreign bond funds.

This is Yellow Umbrella’s second foreign bond mandate. The first was in 2020, when it outsourced another 600 billion won mandate to three domestic fund houses, a Yellow Umbrella spokesperson tells Asia Asset Management. He declined to disclose the identity of the winning bidders.

According to a December 7 report in the Korea Economic Daily, in addition to those appointments, Yellow Umbrella also hired six managers for a private equity strategy last year.

The report said all nine were hired after Du Yeong Jeong, a former chief investment officer of the Korea Scientists and Engineers Mutual-aid Association, joined Yellow Umbrella as CIO in May 2020.

Applications for the new bond mandate are open until January 21. Evaluation and manager selection are scheduled to be carried out between January 29 and February 9.

Yellow Umbrella had 14 trillion won of total assets as of September 2020, with 67% allocated to fixed income.