[2024 Alternative Investment Forum] KIC Lee Hoon CIO "Alternative Investments Are Not a 'Golden Bat' but Still Promising"

Alternative Assets Still Offer Higher Returns Compared to Traditional Assets
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Positive Outlook for Stocks, Bonds, and Alternatives... US Market Remains Attractive

"Alternative investments no longer enjoy the golden era when they were called the 'golden bat,' but they still possess sufficient appeal by offering higher returns compared to traditional assets and improving portfolio performance."

Lee Hoon, Chief Investment Officer of Korea Investment Corporation, is giving a presentation on the topic of "Global Economic Outlook and Investment Strategy Direction" at the 2nd Asia Economy Alternative Investment Forum held on the 12th at Conrad Hotel in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

Lee Hoon, Chief Investment Officer (CIO) of Korea Investment Corporation (KIC), said this during his keynote speech at the '2nd Asia Economy Alternative Investment Forum' held on the 12th at the Conrad Hotel in Seoul. In his lecture titled "Global Economic Outlook and Investment Strategy Direction," Lee stated, "The vision we sought in alternative investments still exists sufficiently." He added, "The time when everyone made money in alternative investments has passed, but the possibility of achieving medium risk and medium return has actually increased," and emphasized, "Alternative investments can play a sufficient role in replacing or complementing traditional assets."

CIO Lee focused his lecture on three main topics: ▲Post-COVID financial market trends ▲Economic and financial market outlook ▲Major asset class outlook and portfolio strategy. He said, "Since the pandemic, financial markets have undergone rapid changes and uncertainties. In the early stages of the pandemic, economic paralysis and aggressive monetary easing by central banks eliminated the low growth, low interest rates, and low inflation that had dominated the past decade, which was the most dramatic change.” Following this, as interest rate hikes began, market and expert forecasts repeatedly missed the mark, increasing uncertainty further. In 2022, when a bull market was expected, a bear market occurred, and in 2023, when a bear market was widely anticipated, a bull market unfolded.

CIO Lee said, "The key point we can analyze from recent volatility is that market predictions are extremely difficult," adding, "It became important to consider how to respond when both our forecasts and experts' predictions are wrong." He explained, "Having principles and following the market while maintaining a different perspective is crucial. In the case of stocks, discovering 'turnaround stocks' has been another key to investment success."

A turnaround refers to performance improvement, restructuring, escaping neglect, and value reappraisal. In the stock market, it means stocks currently facing difficulties in performance but with high potential for a rebound. Meta, the operator of Facebook and Instagram, is a representative example. CIO Lee said, "Meta fell by 75% but then rose 4 to 5 times from its bottom," and added, "The lesson recent volatility has taught us is that only by taking positions different from others can one succeed in stock investment."

Lee Hoon, Chief Investment Officer of Korea Investment Corporation, is giving a presentation on the topic "Global Economic Outlook and Investment Strategy Directions" at the 2nd Asia Economy Alternative Investment Forum held on the 12th at the Conrad Hotel in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

When forecasting major asset classes, CIO Lee expressed generally positive views on stocks, bonds, and alternative investments. He said, "As long as corporate profits do not decline, stock market declines or corrections will be limited," and "For bonds, once the interest rate hike cycle ends, yields above 3% can be expected." Regarding alternative investments, he evaluated, "Although not to the extent of the past, they remain a valid means to strengthen portfolios by providing higher returns than traditional assets." He also emphasized the importance of the ability to select asset managers capable of delivering superior returns, especially in alternative investments.

Meanwhile, regarding the U.S. market, which is gaining an increasing share in global capital markets, CIO Lee said, "The proportion of U.S. investments is likely to continue increasing," and "Considering the high potential growth rate of U.S. stocks, it may be advantageous to increase the U.S. allocation in global portfolios." In terms of portfolio construction, he stressed the importance of investment strategies that reflect market conditions to respond to complex volatility, such as balancing allocations between traditional and alternative assets, as well as between growth and stable assets.