Bank of Korea Takes Charge of Overseas Stock Investments

The Bank of Korea (BOK) has announced a strategic shift to directly manage a portion of its foreign exchange reserves, previously outsourced to private asset managers. This decision aims to cut costs, enhance asset allocation, and gain faster market insights.

Strategic Overhaul for Better Asset Management

Initially targeting 10% of its $358.5 billion securities portfolio, the BOK plans to reduce reliance on external managers like BlackRock and Korea Investment Corp., focusing instead on direct management to improve efficiency and adaptability in volatile markets.

Why Direct Management Makes Sense Now

With the diminishing returns of active strategies and the abundance of information in developed markets, the BOK sees little value in expensive outsourced management. The move also aligns with global trends among pension funds and sovereign wealth funds towards greater direct control over investments.

Looking Ahead

The BOK is expanding its in-house capabilities for stock management, signaling a long-term commitment to leveraging the growth of developed markets, especially the U.S., through direct engagement and real-time monitoring.