Translation to English
"Korea’s wealthy are too dependent on real estate…they should invest in dollar in an inflationary environment"
Jiyeon Seol for The Korea Economic Daily
June 4, 2021
“Korea’s wealthy are putting too much of their money into real estate. In this inflationary phase, it’s better to add dollar investments, not properties,” said Ohad Topor, Chairman of TCK Investments on May 3rd in an interview with Korea Economic Daily.
TCK Investments - which the Israeli investor founded in 2012 - is an investment management office based in Seoul and London which serves wealthy individuals, families, corporations, etc. As a foreign house operating the family office business, it enjoys a strong position in Korea, and with less than 30 clients currently. TCK is a ‘boutique’ strictly for the ultra-high-net-worth, adding 2-3 new clients per year with a minimum investment of 20 million dollars (or approximately 22.3 billion won). Topor explained, “60% of them are private clients such as entrepreneurs, major shareholders and business owners while the remaining 40% are corporations. Since they’re already well acquainted with the local Korean market, our job is to help them access overseas markets.”
He pointed out Korea’s top executives’ reliance on the local market for their portfolios. ”U.S. or European investors spread their investments across the globe, not confining them to their own countries. By contrast, the Korean wealthy fill 60% of their portfolios with local real estate, with all the risk that entails from the domestic market.” As such, his company TCK is focusing on diversifying its clients’ portfolios globally.
Topor tells investors to hold U.S. dollar assets. “The United States is seeing the fastest-growing prices in the world, which implies a commensurate rise of the dollar. All assets are expensive now, but it doesn’t necessarily mean all of them are safe. If a shock triggers a pull-back, the dollar would prove to be one of the safest assets.”
In addition, he said that a tilt towards US equities is a wise move when prices and interest rates are on the rise. “Go for companies with strong pricing power while reducing the tech exposure.” Historically, equities are better positioned than fixed income in periods of inflation. Topor also stressed the importance of incorporating some fixed income into a portfolio to hedge against potential risks, suggesting treasury inflation protected securities (TIPS) and US high-yield bonds.
His advice for the super affluent is to include gold and Bitcoin up to 2% of their portfolios for the sake of diversification. “When it comes to cryptocurrencies, the richest people in the world have been faster than institutions to invest around 1% of their assets.”
Regarding stock markets in the second half of this year, he expects the S&P 500 and the KOSPI to gain 3-10% and 5-15%, respectively. “Given Korean companies’ outstanding performance and their role in the global value chain, securities markets seem promising, though high volatility could be a key concern.”
2021 is a landmark year for TCK investment as it marks 100% cumulative returns since its inception in 2013. TCK’s flagship portfolio has recently surpassed 99% (in Korean won). “100% over 8 years may not sound much, but it’s meaningful that we’ve achieved this with a low volatility. We’re currently maintaining about a third of the volatility seen in the KOSPI.”