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Corporate Moves

South Korea Pension Fund Names New CIO

Ahn Hyo-joon, 55, will lead the investment strategy of the world’s third-largest pension fund.

By Michael Katz

Ahn Hyo-joon

South Korea’s National Pension Service (NPS) has named Ahn Hyo-joon as CIO of its $567.83 billion pension fund effective Oct. 8., according to Yonhap News Agency. The pension fund is the third-largest in the world by asset value, according to Willis Tower Watson.

Ahn, 55, replaces Soo-Cheol Lee, who had been the interim CIO since July, after Myoun-Wook Kang abruptly resigned in July of 2017, becoming the fund’s first CIO to leave before the end of his two-year term.

“Chairman Sung-joo Kim concluded that Ahn is the right person to manage NPS assets of over 643 trillion won, considering his expertise, global capability, and understanding of the National Pension Service,” NPS said in a statement.

Ahn was chosen among five short-listed candidates, and his two-year term can be extended for another year, according to Yonhap. Prior to joining the NPS, he was CEO of BNK Financial Group, a holding company based in Busan. Before that he was CEO of BNK Securities and CEO of Kyobo AXA Investment Managers.

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Since its  inception in 1988, the National Pension Fund has recorded an average annual return of 5.5% as of the end of July, with a cumulative investment return of 309 trillion won.

“Challenges we are facing now include the higher impact of our increasingly growing fund on the domestic financial market and the prolonged trend of low interest rate and low growth,” said Ahn in his welcome message on the NPS’ website. “To overcome such challenges, we will continue to make our greatest effort to improve our investment returns down the road by proactively seeking new investment opportunities with more diversified portfolios.”

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Home > News > Risk > Princeton Endowment Returns 14.2% in 2018
Risk

Princeton Endowment Returns 14.2% in 2018

 University’s investment earnings lead all Ivy League endowments so far this year.

By Michael Katz

The investment portfolio for Princeton University’s endowment returned 14.2% for the fiscal year that ended June 30, raising its total value by $2.1 billion to $25.9 billion from the same time last year. The returns are so far the highest reported by any Ivy League endowment, only Columbia University left to announce its fiscal 2018 results.

It is the second straight year of double-digit returns for Princeton’s endowment, which reported a 12.5% return last year, and easily beat Cambridge Associates’ preliminary mean and median returns for colleges and universities of 8.5% and 8.3%, respectively.  

The Princeton University Investment Co. (Princo), which manages the endowment, also reported an average annual return of 8.0% over the past decade, which it said ranks the university among the top 1% of 458 institutions listed by the Wilshire Trust Universe Comparison Service.

“The earnings from our endowment cover more than half of the university’s annual operating budget, as well as help fund our highest priority strategic initiatives,” Princeton University Provost Deborah Prentice said in a release.

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So far this year, all Ivy League endowments have reported double-digit gains, ranging from Princeton’s 14.2% to Harvard’s 10%. According to investment research analysts Markov Processes International, the strong performance has been driven in large part by investments in private equity and venture capital, which have returned 18.7% and 18.3%, respectively, in fiscal 2018, compared to a 14.4% return for the S&P 500.

For example, Markov estimated that private equity and venture capital contributed 8.3% and 3.3% of Yale’s 12.3% return for 2018, with other asset classes contributing only 0.8% of its annual return. The firm also estimated that private equity and venture capital contributed 5.2% and 3.2%, respectively, of Dartmouth’s 12.2% return; and 3.6% and 3.3%, respectively, of Harvard’s 10% return.

According to the Princo’s investment strategy, the endowment’s mission requires a long-term target for returns to exceed 10% per year, which “financial theory and empirical evidence indicate can only be achieved through an aggressive, equity-biased approach.”

As a result, 95% of the university’s portfolio is allocated to equities, with US equities only accounting for 10%. Significant portions of the portfolio are also invested in other high-return asset classes, such as international, hedged, and private investments.

 

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