National Pension Service of Korea and Russell Investments Form New Global Listed Real Estate Strategy
New mandate focuses on listed real estate as COVID-19 vaccine alters outlook for the asset class
SEATTLE--(Business Wire / Korea Newswire) December 22, 2020 -- Russell Investments, a leading global investment solutions partner, announced today that South Korea’s public pension fund, the National Pension Service (NPS), has partnered with the firm for US$1 billion global listed real estate mandate. This is the second Global Real Estate Securities (GRES) mandate awarded by NPS to Russell Investments as part of their longstanding relationship.
“We’re very honored that our dynamic client NPS has extended their trust in our ability to deliver a beneficial listed real estate solution,” said Global Chief Investment Officer Pete Gunning at Russell Investments. “NPS has been actively engaged in the cutting-edge real estate asset class, even amid the COVID-19 pandemic, and we share their commitment to this increasingly important asset class.”
“We are excited to further expand our listed real estate capability to capitalize public real estate market opportunities and complement the private real estate portfolio,” said Scott Kim, Head of the Real Estate Investment Division at NPS. “Not only does this new mandate allow us to efficiently capture the potential price discrepancies between public and private real estate markets going forward but it will also act as an excellent portfolio diversifier, and help improve the overall portfolio risk-adjusted return.”
The new mandate is designed to take advantage of tactical opportunities with the majority allocated following periods of market downturns. NPS aims to leverage Russell Investments’ extensive research efforts, including 30 years of experience researching real estate managers, and robust implementation capabilities in order to pursue an agile approach to market opportunities. Russell Investments will implement the firm’s multi-asset portfolio management capabilities, to carefully address portfolio risk.
Looking toward 2021, Russell Investments’ strategists expect public real estate will attract more cash flow due to market conditions that feature extended low interest rates, relatively high U.S. equity valuation and ample liquidity.
“Successful distribution of COVID-19 vaccines should enable demand for public real estate to recover, particularly for the most impacted property sectors, such as retail, office and lodging,” said Bruce Eidelson, Director, Senior Portfolio Manager, Equity, at Russell Investments. “We expect the ever-broadening intra-sector performance dispersion will create a better active management environment which can produce significant return over the benchmark.”
Effective active management in the $2 trillion GRES market, which in 2020 includes 470 companies in 35 countries and 11 sectors, has become increasingly important as investors seek return potential in well-diversified portfolios. For example, research on Russell Investments’ universe of real estate managers shows a performance spread of more than 300 basis points between first- and third-quartile managers over the past 12 quarters.
About Russell Investments
Russell Investments is a leading global investment firm providing tailored solutions and services to institutions and individuals through financial intermediaries. Russell Investments is the fourth-largest adviser in the world with $297.5 billion in assets under management (as of 9/30/2020) and $2.5 trillion in assets under advisement (as of 6/30/2020) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments operates through 19 offices in major financial centers such as New York, London and Tokyo.
About National Pension Service of Korea
The National Pension Service (NPS) was established in 1987 to help secure the retirement benefits of Korean citizens with income security, thereby promoting national welfare in the case of retirement, disability or death. As the world’s third-largest pension fund, the National Pension Fund has reached KRW 785 trillion (approx. $674 billion) of assets under management as of September 2020.
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