Do you think the the market needs the fed to
cut interest rates to rally even further? The current
interest level is a little bit high. So I
think it has to be lower than it is now
for stock stock market to see a rising trend in
the face of the economic slowdown like this, maybe
the fourth quarter or maybe the next the first quarter
of next year? Is that the reason why you're
more in favor of fixed income at this point?
So would you say fixed income over equity markets is
your, is your favorite asset class right now?
Yes. Yes. I think uh equity market.
I think the possibility of the sharp drop of the
price is so risky assets, uh is very limited
and the fixed income interest rate is a little bit
higher. And if uh if the interest rate don't
fall significantly, the current interest level is, is
very attractive. Are you looking outside traditional assets like
stock and bond markets? Where would you, what
would, what exposure would you increase? I think
the expansion of alternative market would be very helpful.
Uh-huh, at the end of 2021 the A I
, the alternative investment ratio of K IC is 17.5
but we increased the 5% of uh alternative investment.
And if you look at the, the returns of
the traditional assets, it is 17.5 but maybe 2023%
maybe the and at the end of the last year
, 22.58. But now 23% our target is to
25% by, by 2025. I know part of
your strategy within alternatives is private debt and private credit
. How much are you looking to invest in private
credit? Uh private credit is the one of the
most promising sector under these circumstances. Actually, our
portion is around 10% of our alternative investment. Actually
, we are trying to increase maybe 15% or above
15%. What type of yields are available for people
who are looking at private credit? I know you're
actively looking to increase what's available. We are we
are direct lending mainly. Yeah, I think when
we are direct uh lending directly to blue chip companies
with high cash flow uh would be very attractive.
Are there any specific industries or sectors that you're looking
to be active in when it comes to private credits
or geographies or countries or territories? What's what's the
most interesting part to you right now? Private credit
actually uh private, I mean there is no specific
reason for private credit, generally the alternative investment,
the advanced countries like the US and the Europe is
the preferred uh country. It's because there are a
lot of uh data sourcing opportunities and, and uh
leading gps, I guess a lot of people now
might be wondering, you're going quite relatively big on
alternatives. So, within alternatives themselves, you mentioned
10 to 15% of that would be private debts.
If you could talk about the other 80 85% of
alternatives. How do you want to organize that part
of your asset allocation? Maybe 50% maybe uh private
equity and uh real estate and infrastructure, maybe 2025
and hedge fund and the private debt is the the
10 to 15%. Ok. So 25% of total
assets are in alternatives. If you have 23 23%
the target is 25% by 2025 by 10 to 10
and five. If you could increase that further with
you or is that, is that the current maximum
that you can go? For example, we have
some limitations from the Minister of Finance. They are
our one of main sponsors. They have some guidance
. So I think in order to increase the rate
of uh alternative investment, we need to uh discussion
with them about this. I know this is more
longer term, but would you see a need in
the future to have those discussions? I think as
a uh investor, as that investor, we need
to increase the proportion of alternative investment, 30% 40%
maybe CPPIB is over 50%. But uh we are
also the keeper of the foreign exchange. So we
have to maintain our liquidity. So I think maybe
25% may be appropriate for the time being.