South Korea’s Construction Workers Mutual Aid Association (CWMAA) invested a total of 180 billion won ($160.2 million) in an office building in Philadelphia, the latest in a growing trend among domestic social and public funds to seek alternative investment for higher returns amid sluggishness in local assets.

According to industry sources on Thursday, the CWMAA extended a 110 billion won loan to a special purpose company purchasing an office building in Philadelphia in the U.S. and acquired a 70 billion won stake in the special purpose company. The investment period is for five years, with an internal rate of return estimated at 15 percent. KB Asset Management Co. is to oversee the deal.

“We finally settled on Philadelphia given its high growth potential,” said a CWMAA official. “We consider it a more reasonable bet than New York, whose property prices have surged in recent years.” The fund will continue to keep its eyes open for other alternative investment opportunities overseas, according to the official.

The CWMAA manages a total of 3.38 trillion assets as of late 2017. About 65 percent of its portfolio is focused on bonds, with stocks accounting for 13 percent and alternative assets 14 percent. It made a 4.24 percent return on its investment last year, buoyed by a 23.67 percent yield on equity-based investments on the back of a bullish stock market.

The association announced last year to turn more aggressive in its investment and has been upping its stake in stocks and alternative assets and reducing investment in bonds.

By Cho Hee-young and Kim Hyo-jin

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