Inside Advantage

October 01, 2013 by Loch Adamson

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WHAT A DIFFERENCE half a decade makes. When Dong-ik (Don) Lee joined Korea Investment Corp. in December 2008 as head of its new alternative-investment team, the sovereign wealth fund was struggling to diversify its then-$17.8 billion portfolio and shore up its assets. Morale was low, and losses were mounting. Eleven months earlier KIC had made an ill-timed $2 billion investment in Merrill Lynch & Co., and the troubled investment bank’s share price was in free fall. Most of KIC’s portfolio was being managed externally, but the fund had begun hiring more internal portfolio managers to run a wider range of fixed-income and equity strategies in-house to save money and capitalize on economies of scale. Fast-forward five years, and KIC has undergone a dramatic transformation, building up its asset management staff, diversifying its portfolio and reaping the cost benefits of running more of its own resources. The fund’s portfolio was worth…

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