[SEOUL] South Korea’s sovereign wealth fund plans to increase allocations to tech startups and venture capital funds (VCs) as part of its broader push to deepen exposure to artificial intelligence (AI) and other disruptive technologies.
Korea Investment Corporation (KIC), which manages US$206.5 billion in assets, is expanding its allocation to alternative assets to enhance returns, and exploring tech investment opportunities in China, chief executive officer Park Il Young said.
KIC is also ramping up its bets on AI and tech companies in the public markets and exploring opportunities across the AI value chain – from data centres and energy infrastructure to core technologies and applications, he said.
Investing in startups and VCs offers an early access to promising trends as well as potentially high returns, according to Park.
“Rather than responding to short-term volatility, we are trying to focus on long-term growth potential and structural trends,” he said. “We expect US market strength to continue, especially in the tech sector.”
The renewed focus marks a strategic pivot aimed at enhancing the fund’s mid- to long-term performance. KIC, launched two decades ago with an initial capital of US$1 billion, has expanded to US$206.5 billion in assets under management as at end-2024. Over that period, the sovereign wealth fund delivered an annualised return of 4.75 per cent.
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Park, who took the helm in September, is seeking to boost the fund’s performance. Lawmakers have criticised KIC for lagging behind its peers. Norway’s sovereign wealth fund, Norges Bank Investment Management, posted a 13 per cent return last year, versus KIC’s 8.49 per cent.
While KIC’s exposure to startups and venture capital remains relatively small and is not broken out separately from its private equity portfolio, the plan signals a deeper commitment to early-stage innovation. Park said the fund has a strong network in Silicon Valley through its San Francisco office.
The US remains KIC’s most significant market. Roughly two-thirds of its public equity portfolio is invested in the US. Its top holdings include a US$3.1 billion stake in Nvidia and US$2.7 billion in Microsoft. They exclude KIC’s indirect exposure through other investment vehicles.
Park, 56, assumed the CEO role in September. Before that, he served as an executive director at the World Bank, where he developed expertise in renewable energy – another focus area for KIC as AI accelerates global power demand. A short stint to support Korea’s startup ecosystem about eight years ago as part of his long career at the government also helped shape his investment outlook.
That experience gave him a front-row seat to how venture capital firms were investing early in platform startups and AI, and some of those startups went on to become Korea’s leading tech platforms.
Park also sees China’s technology sector as “promising” and is looking for opportunities. While most of the fund’s exposure to Chinese tech stocks is through passive benchmark tracking, it’s considering a more active approach given the sector’s fast ascent.
Park acknowledged the challenge of investing in China, given the intensifying rivalry with the US and ongoing macroeconomic uncertainties.
“It’s a little tricky and complicated to invest in the Chinese market,” he said. “We see the rivalry and tension between the US and China, and we expect this trend to continue for the time being.” BLOOMBERG
