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Korea Pension Fund to up private credit investments

Government Employees Pension Service, one of South Korea’s major pension funds with around $6bn in assets is looking to up its allocations to alternative assets, including private credit and real estate, to boost returns, according to a report by Bloomberg.

Speaking in an interview with Bloomberg, Chief Investment Officer Baek Joohyun revealed plans to increase alternative allocations to 34% of assets in the next four years from this year’s target of around 28%.

“Stocks and bonds are very volatile, while alternative investments are attractive as a hedge against risk,” said Baek. “It’s a lending-friendly environment,” and private credit offers better risk-adjusted returns in a scenario of high interest rates, he added.

The fund’s outstanding positions in private debt stood at 447.1 billion won ($340 million) as of July.

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