As Jang Dong-hun took on the role of chief investment officer at Korea’s Public Officials Benefit Association (POBA), he found himself delving into uncharted territory. Tasked with managing a portfolio with a 5% annual risk-adjusted return target, Jang turned to an unexpected source of inspiration – a book by legendary Yale endowment fund manager David Swensen.
Swensen’s book, ‘Pioneering Portfolio Management,’ proved to be a game-changer for Jang. It opened his eyes to the world of alternative investments and provided valuable insights on asset allocation that helped him navigate the challenges of his new role.
Under Jang’s leadership, POBA underwent a significant transformation in its investment strategy. From minimal exposure to alternative assets in 2015, the pension fund saw a remarkable shift, with over 72% of its portfolio allocated to alternative investments by 2021. This strategic shift resulted in impressive returns, with the fund’s performance nearly doubling from 2016 to 2020.
Jang’s journey underscores the importance of embracing innovation and exploring new avenues in the world of investing. By following Swensen’s teachings and adapting them to the unique challenges he faced, Jang was able to drive success and growth at POBA.
In a rapidly evolving investment landscape, the lessons from Swensen’s book remain as relevant as ever, serving as a valuable guide for asset managers seeking inspiration and direction in managing alternative investments.
