[RFP] Korea fund for small firm owners solicits bids for $88 mn equity mandates

  • 2016-07-26

The Yellow Umbrella Mutual Aid is looking for stock management firms to invest a total of about 100 billion won ($88 million) and pick up to four fund houses for the mandates, the South Korean savings fund for small-sized business owners said on July 26.

It posted the notice of a request for proposal on the website of the Korea Financial Investment Association. The deadline for the proposal is set for Thursday, August 5 at 5 p.m. (Korean time). It will select the management firms later in August.

The $4 billion savings fund will select one or two management firms for advanced market-focused stock portfolios which will be composed of ETFs tracking stock indices of developed countries. Additionally, it will choose one or two firms for industry-focused stock investments composed of ETFs tracking sector indices. Those portfolios will be required to employ a static investment strategy: equal weighting and monthly rebalancing of asset allocations in portfolios.

The entrustment period will be less than one year, but renewable on a yearly basis.

A qualified candidate for the mandates should have the outstanding balance of ETFs worth more than 5 billion won included in funds under management at the end of June 2016, for a management period of longer than six months. They also should be able to form a private investment fund and have a presence in South Korea.

In an interview with the Korea Economic Daily last month, its CIO Hwang Youn-ha said that the fund will refrain from aggressive investment before its AUM reaches 10 trillion won ($9 billion): instead, it will favor safe assets such as mezzanine loans and exchange-traded funds, and focus on developed markets to secure stable, albeit low, returns from overseas equities portfolios. 

<Edited by Yeonhee Kim>