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Korea construction workers’ pension seeks 18 managers for two equity mandates

Pension
By Hui Ching-hoo   
January 14, 2021

South Korea’s Construction Workers Mutual Aid Association (CWMAA) plans to hire 18 local and foreign fund managers for two equity mandates of unspecified value.

The group will appoint 11 local managers for a domestic equity mandate, and seven international managers for a foreign equity mandate, according to its request for proposal published on the website of the Korea Financial Investment Association on January 12.

The domestic mandate is benchmarked against the Korea Composite Stock Price Index, and the foreign mandate against the MSCI All Country World Index.

The move represents a shift in direction for the pension fund, which has focused on outsourcing for alternative or non-mainstream strategies rather than plain vanilla investments in recent years, according to a portfolio manager in Hong Kong.

“The fund’s alternatives allocation is relatively high [compared to other] Korean asset owners. The new mandates may reflect that it’s trying to take a more balanced asset allocation approach,” he tells Asia Asset Management, speaking on condition of anonymity.

He says the domestic mandate may also allow the fund to better capitalise on the rising Korean stock market.

The benchmark Korean stock index gained over 32% in 2020 as global central banks eased monetary policy to stimulate economies roiled by the coronavirus pandemic.

Applicants for the domestic mandate must have at least 10 billion won (US$9.13 million) of Korean stock assets. Applicants for the foreign mandate must have the same value of assets in global stocks. All of them need a minimum three-year track record in the respective investments.

Applications are open until January 25, and due diligence and manager selection are scheduled for February 4-21.

Seoul-based CWMAA, which manages pension contributions of 5.47 million construction workers, had around 3.8 trillion won of total assets as of September 2019, according to figures published on the group’s website.