[Fund & Mutual Aid In-Depth]③Sahak Pension Manages 28 Trillion Won With a Balanced Portfolio and Mid- to Long-Term Strategy

Pursuing Stable Returns Over Short-Term Gains
Steady Growth in Returns and Asset Size Each Year
Achieving Top Rating in Fund Management Evaluation for Four Consecutive Years
Expanding Alternative Investments Leads to Major Successes with JobKorea

Editor's NotePension funds and mutual aid associations have long established themselves as key players in the capital markets. Beyond their fundamental differences-pension funds securing the public's retirement and mutual aid associations focusing on asset growth and welfare for their members-they also differ significantly in terms of asset size, investment strategy, and organizational structure. We present an in-depth analysis of pension funds and mutual aid associations, which serve as major sources of capital for institutional investors both domestically and internationally.

The Korea Private School Teachers’ Pension (Sahak Pension) invested approximately 70 billion won in the third blind fund managed by private equity firm H&Q in 2013, which was used for investment in JobKorea, and achieved a return nine times its principal after eight years. In 2016, it also committed capital to the Special Situation Fund (SSF) No. 1 managed by Stick Investment, which was used for an investment in HYBE (then Big Hit Entertainment), and recovered about seven times its principal in five years.

Thanks to these results, Sahak Pension achieved a record-breaking 25% return in the alternative investment sector in 2021. This was not simply a matter of luck; it was the outcome of a long-term portfolio diversification strategy.

Sahak Pension Naju Headquarters Building. Sahak Pension

Asset Growth Even During the IMF Crisis... Stable Returns Through Diversified Investments

Established in 1974 to ensure retirement security and welfare for private school faculty, Sahak Pension faced a challenging period in its early years, as most of its funds had to be deposited in the government-led National Investment Fund. However, after switching to autonomous management in 1984, it began to grow rapidly. Its total assets, which stood at around 1 trillion won in 1990, surpassed 10 trillion won in 2012, 20 trillion won in 2020, and as of the end of last year, reached 28.7472 trillion won, closing in on the 30 trillion won milestone.

The core of Sahak Pension’s asset management is a "balanced portfolio." By extensively diversifying investments across domestic and overseas stocks, bonds, and alternative assets (such as private equity, real estate, and infrastructure), it has reduced risk. Its focus on securing stable returns rather than chasing short-term gains has enabled it to steadily grow its assets even during crises such as the International Monetary Fund (IMF) currency crisis and the global financial crisis. Since the 2010s, Sahak Pension has accelerated portfolio diversification by increasing the proportion of alternative and overseas investments to enhance growth potential.

Investments are managed strictly according to medium- and long-term plans. Since 2007, Sahak Pension has established and operated a five-year "mid- to long-term strategic asset allocation plan." When a new investment opportunity arises, the first consideration is whether it aligns with the plan, rather than simply whether it is a good investment. Investment weights are adjusted to maintain balance between the current and target portfolios. The focus is on a systematic, trend-resistant approach to asset management. According to the mid- to long-term strategic asset allocation plan established in 2023, the portfolio is designed to consist of 33% domestic bonds, 20% overseas equities, 17% overseas alternative investments, 16% domestic equities, 10% domestic alternative investments, and 4% overseas bonds.

Even with this approach, Sahak Pension has responded swiftly to changes in the global economic and financial environment. For example, when exchange rates rise, it reduces the proportion of overseas bonds and equities and increases domestic bonds and equities. A notable case was in the fourth quarter of 2022, when the won-dollar exchange rate surged. Sahak Pension sold about 300 billion won worth of overseas stocks and bonds and reinvested in high-quality domestic high-yield bonds and undervalued domestic stocks, achieving significant returns-an exemplary case of fund management.

Sahak Pension has also continuously worked to improve its management processes. For alternative investments, it increased the number of external review committee members to enhance expertise and objectivity, and strengthened post-management systems such as monitoring recoveries and risk. For overseas equity investments, it shifted from delegated management to direct management, reducing management fees and benefiting from public pension tax exemptions. As a result, it achieved an additional profit of about 3.5 billion won in 2021.

Asset Management’s ‘Golden Era’... Continued Through Alternative Investments

As a result of these strategies, Sahak Pension achieved a return of 13.46% and an operating profit of 2.8402 trillion won in 2023, and followed up with a return of 11.63% and an operating profit of 2.7725 trillion won last year, marking two consecutive years of record performance. From 2019 to 2021, it outperformed other pension funds with returns exceeding 11% for three consecutive years.

Except for 2022, a period of global financial market downturn, Sahak Pension has consistently generated high returns since 2019, earning the highest "Outstanding" rating for four consecutive years in the fund management evaluation organized by the Ministry of Economy and Finance.

Looking ahead, Sahak Pension plans to continue expanding its alternative investments, particularly in overseas alternative assets, as a future growth engine. The appointment of Jeon Beomsik as Chief Investment Officer (CIO) in 2023 and the decision to renew his term last month were natural outcomes of this strategy. Jeon, an expert in alternative investments, joined Sahak Pension in 1991 and has experience in bond management, investment analysis, risk management, and alternative investment teams. He later served as Head of Investment Banking at Hyundai Securities and Vice President of Alternative Investment at SK Securities. Upon becoming CIO, he accelerated the expansion of alternative investments by placing the corporate finance and real estate infrastructure teams, previously under the alternative investment division, directly under the fund management division. The proportion of overseas alternative investments increased from 11.47% in 2023 to 17.79% in 2024, a rise of more than 3 percentage points in just one year.

Conversely, the domestic proportion of equities and alternative investments is being gradually reduced. The fund plans to raise its mid- to long-term target return to 5.30% (5.35% for mid- to long-term assets) by 2029 and restructure its portfolio to focus on high-growth overseas assets.