US Treasuries Get Vote of Confidence From Korea’s Wealth Fund

f[{0x7jqiwi)plrkpq9c)mm3_media_dl_1.png Korea Investment Corp.

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(Bloomberg) — South Korea’s $206.5 billion sovereign wealth fund is standing by US Treasuries as a core holding, undeterred by recent market volatility.

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“We are happy to invest in US Treasuries in a sense that the bonds give very strong liquidity and stable returns,” regardless of short-term market volatility, Park Il Young, chief executive officer of Korea Investment Corp., said in an interview with Bloomberg. 

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Park’s remarks underscore the enduring appeal of US assets for long-term investors such as sovereign wealth funds, even after recent bouts of volatility have undermined their allure. Uncertainties over President Donald Trump’s trade policy and ballooning fiscal deficits have roiled the Treasury market and pushed a gauge of the dollar down more than 10% from a January high. 

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Investors have been diversifying exposure as a long-term trend, and it’s unlikely that the Trump administration’s policies will shake the dollar’s status as a key reserve currency, he said.

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“As for the weight of UST in our portfolio, we don’t have any plans to change it yet. We don’t have any specific plans. Basically, the nature of bond investment is to secure stability and  liquidity,” Park added. The fund does not give out details of its Treasuries holdings.

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Despite the turmoil in financial markets, foreign investors’ holdings of US Treasuries held close to a record high in April, latest data showed. Japan and Britain raised their holdings, while China and Canada cut their exposure, the data showed.

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Read: Foreign Treasuries Holdings Held Near a Record in April Turmoil

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While Park acknowledged potential risks to fixed-income investments stemming from inflation and shifts in US fiscal and interest-rate policy, he also expected continued efforts to stabilize interest rates.  

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America’s rising debt and deficit, a downgrade by Moody’s Ratings and Trump’s massive budget bill are further clouding the outlook of the world’s biggest economy.

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That puts investors from Asia, including institutions like KIC, at the center of efforts to finance America’s deficits, particularly through sustained demand for Treasuries, a critical pillar of US economic stability. 

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KIC held nearly 64% of its public assets in North America as of end-2024, up from from 61.1% in 2023. The sovereign fund, which returned 8.49% last year, only invests in overseas assets.

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Alternative Assets 

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Park, who took the helm in September, is under pressure to improve the fund’s performance. During a parliamentary audit last year, lawmakers criticized KIC for lagging behind its peers. Norway’s sovereign wealth fund, Norges Bank Investment Management, posted a 13% return last year.