The Secret to National Pension Service's Returns Lies in Overseas Investments

Last Year's Annual Return 'All-Time High'... Overseas Stock Sector Profit Exceeds 30% Amid Global Stock Market Rally

[Asia Economy Reporter Park Jihwan] The National Pension Service (NPS) achieved its highest-ever rate of return through fund management last year, thanks to a strong performance of over 30% in the overseas equities sector.

The NPS announced on the 28th that its annual rate of return as of the end of last year was 11.31% (provisional). This is the highest return since the Fund Management Headquarters was established in November 1999. The NPS has recorded double-digit returns only three times since the establishment of the Fund Management Headquarters: last year, 2009 (10.39%), and 2010 (10.37%).

The key to this achievement was the improvement of various economic indicators amid uncertainties such as the US-China trade dispute and Japan's export restrictions. This was supported by interest rate cuts and economic stimulus policies in major global countries including the US, which led to a strong global stock market.

In fact, the NPS's financial sector posted a return of 11.33%. By asset class, domestic stocks returned 12.58%, overseas stocks 30.63%, domestic bonds 3.61%, overseas bonds 11.85%, and alternative investment assets 9.62%. In particular, overseas stocks exceeded a 30% return, boosted by the global stock market rally following the announcement of the US-China Phase One trade agreement at the end of last year and exchange rate effects. Domestically, the stock market rose nearly 10% on expectations of a recovery in the earnings of export companies such as semiconductor firms, helping the NPS achieve double-digit returns.

The NPS evaluated that the bond market showed strength due to the decline in domestic and foreign interest rates, increasing bond valuation gains. In alternative investments, high returns were recorded thanks to interest and dividend income as well as the appreciation of held assets.

Last year, the NPS's fund management earnings amounted to 73.4 trillion won (provisional). This is 1.5 times the 47.8 trillion won in insurance premiums collected from 22 million NPS subscribers last year. It is also 1.6 times the 45.3 trillion won trade surplus recorded by South Korea last year.

As a result of these achievements, the total accumulated assets of the NPS fund reached 736.7 trillion won, an increase of 97.9 trillion won compared to the previous year. Of this, cumulative earnings amounted to 367.5 trillion won, accounting for half of the total NPS fund assets.

The NPS plans to maximize fund returns by further activating overseas investments to overcome the investment limits of the domestic market, as the fund size is expected to surpass 1,000 trillion won in 2024. It also intends to strengthen fund management capabilities by expanding excellent investment professionals and improving infrastructure to ensure stable fund management.