POBA Announces Asset Management Strategy at Money Show
Proportion of Real Assets Such as Real Estate to Be Reduced
The Public Officials Benefit Association (POBA) has outlined its asset management strategy for the next five years, proposing a reduction in the proportion of real assets such as real estate and an expansion of private credit loans and REITs (Real Estate Investment Trusts) investments.
Heo Jang, Chief Investment Officer (CIO) of the Administrative Mutual Aid Association, is speaking about asset management strategies at the 'POBA Money Show' held on the 3rd at Seoul Dragon City in Yongsan-gu, Seoul. Photo by Kwon Hyunji
Heo Jang, POBA’s Chief Investment Officer (CIO), stated at the ‘POBA Money Show’ held on the 3rd at Seoul Dragon City in Yongsan-gu, Seoul, “POBA pursues an asset management strategy that invests in private credit loans offering higher interest rates than banks and bonds, as well as stocks of industries and companies that are growing trend-wise, aiming for stable yet high returns.”
He explained, “Investments in private credit loans such as corporate loans and real estate-backed loans have the advantage of generating high returns while reducing risk through extensive diversification,” adding, “These will be the assets that increase the most significantly in POBA’s portfolio over the next five years.” The share of private credit investments, currently 28.7% this year, is planned to increase by 4.8 percentage points to 33.5% by 2029.
He also expressed a positive outlook on REITs and emerging market investments. Heo said, “We do not view U.S. real estate favorably, but we have a positive view of REITs, which trade real estate as securities,” explaining, “The pattern of REITs is inversely proportional to interest rates. By effectively utilizing interest rate patterns, good performance can be achieved in REITs.” He added, “India and Vietnam have young and dynamic markets with average ages of 28 and 33 respectively,” and “We are steadily increasing investments in emerging markets like these.”
On the other hand, there are plans to reduce investments in real assets such as real estate and infrastructure. Heo stated, “Real assets have certain cycles and are exposed to some risks,” and “We plan to lower the investment proportion from the current 33% to around 20%.”
He identified major transformation and unpredictability as characteristics of this year’s asset management environment. Factors such as the strengthening of U.S. exceptionalism following the inauguration of the second Trump administration, a strong dollar, and sustained high interest rates in the 4% range are making investments challenging. Heo emphasized, “If the market environment changes, asset management strategies must also adapt accordingly to achieve good results.”
Meanwhile, POBA recorded a net profit of 389.3 billion KRW last year, achieving nine consecutive years of profitability. During the same period, the investment asset portfolio (27.6 trillion KRW) achieved a return of 9.1%, ranking among the top within the association. As of last year, total assets stood at 28.7691 trillion KRW.
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