Korea Teachers Pension CIO Looks Toward Emerging Nations

(August 11, 2010) — Chief Investment Officer Lee Yun Kyu, who oversees 8.3 trillion won ($7.1 billion) at Korea Teachers Pension says emerging nations, relatively free from the sovereign debt crisis, are in a strong position.

Lee’s aversion to developed countries is supported by research by the International Monetary Fund, which said last month that developing economies will expand three times quicker than industrialized nations this year.

According to Bloomberg, Korea Teachers Pension prefers bonds and stocks of Brazil, China, Indonesia and Malaysia over developed countries because their economies are expanding at a faster rate. The pension’s CIO told Bloomberg that the fund may invest more there, as Europe’s government debt crisis and fears over the slow pace of the US economic rebound push investors toward markets that have been less impacted by the financial crisis.

While developing nation bonds rallied 4.3% in July to the lowest level since Bloomberg began compiling data from JPMorgan Chase & Co.’s EMBI+ Index in 1998, the MSCI Emerging Markets Index climbed 8% last month.

With 380 billion won in fixed-income and 240 billion won in stocks, overseas assets account for 9% of Korea Teachers Pension’s investment portfolio, Lee told Bloomberg. China accounts for the largest percentage in overseas equities, Lee said.

Investments by the pension include a recent June purchase of two buildings in Japan, which it bought with other Korean investors. Korea Teachers is also considering buying real estate in the US, UK, and Australia, Bloomberg reported, because it’s still undervalued.