"Positive Outlook for Financial Markets in the Second Half of the Year... Increasing Allocation to Alternative Investments and Overseas Stocks"

Seowonju, Director of Fund Management Division, Government Employees Pension Service

Seowonju, CIO of Government Employees Pension Service

5.7% Return in First Half, Exceeding Target

"Reducing Bonds to 38% by 2026"

Planning 45 Billion KRW Venture Investment This Year

[Asia Economy Reporters Lim Jeong-su, Park So-yeon] Seowonju, Head of Fund Management at the Government Employees Pension Service (GEPF) and Chief Investment Officer (CIO), stated in an interview with Asia Economy on the 15th that "the global economy is expected to continue recovering in the second half of this year, and financial markets will show positive movements."

Seowonju has been managing the funds of the Government Employees Pension Service since 2019. As of early June, the total assets under management amount to approximately 10 trillion KRW, with 8.2 trillion KRW in mid-to-long-term assets and about 1.8 trillion KRW in payment reserves. Last year, the fund achieved an 11.41% return. In the first half of this year, the mid-to-long-term asset return rate was 5.7%, surpassing the annual target of 4.1%.

Seowonju mentioned, "The U.S. is gradually increasing the possibility of liquidity reduction due to economic recovery such as employment improvement, and South Korea is also considering exit strategies like interest rate hikes as the economy normalizes," adding, "Stock and other risk asset prices are rising amid expectations of economic recovery, but fluctuations continue due to issues like interest rate hikes."

He added, "In the second half, concerns about inflation and liquidity reduction through tapering may negatively impact financial markets, but corporate earnings growth and economic normalization momentum will continue," further stating, "Reports continue to show that corporate operating profits will not decrease but increase, and economic growth forecasts are also rising."

Regarding the U.S., based on past experience, the recovery period after about one year of economic recession typically lasts around 60 months, or over five years on average. Although the U.S. experienced a significant recession last year, the recovery is not expected to end within a year.

Seowonju hinted, "Reflecting the global economic investment environment, we plan to reduce the bond ratio and increase alternative investments and overseas equity proportions." Specifically, the Government Employees Pension Service plans to reduce the bond asset ratio from 43.9% in 2021 to 38% by 2026. The equity asset ratio will be maintained at around 31%, while increasing the proportion of overseas equities. Considering improvements in the investment environment for real assets such as real estate and infrastructure, the domestic and international alternative asset ratio is targeted to expand from 24.7% in 2021 to 31% by 2026. This year, a total of 45 billion KRW will also be invested in ventures. To this end, three VC fund management companies will be selected.