Inflation Prediction One Year Ago... National Pension Increases 'Super Core' Assets to 3 Trillion Won

[Asia Economy Reporter Park So-yeon] The National Pension Service (NPS) significantly expanded its 'Super-Core' assets last year in anticipation of inflation and to prepare for market fluctuations. Super-Core assets are ultra-safe assets guaranteed with minimum returns through government guarantees from various countries.

According to the investment banking (IB) industry on the 11th, as of the end of 2021, the NPS Fund Management Headquarters invested 6.9158 trillion KRW in core assets. This accounts for 24.8% of the total infrastructure asset investments of the National Pension Service.

As of the end of 2020, the NPS's core asset investment was 4.1332 trillion KRW (16.6%), meaning approximately 3 trillion KRW was additionally invested within one year. The proportion of core assets in total infrastructure investments increased by 8.2 percentage points.

A representative example of core infrastructure asset investment is the joint investment by the Dutch pension fund APG and the National Pension Service in Portugal's largest highway operating company.

An official from the NPS Fund Management Headquarters said, "Concerns about inflation have been steadily raised for over a year, and the Fund Management Headquarters has reorganized internal investment processes to facilitate core asset investments in preparation for such situations."

Since last year, the National Pension Service has expanded asset investments focusing on regulated assets located in advanced countries, which are subject to government regulations or long-term contracts with high-quality counterparties, enabling defense against demand and price volatility risks and inflation.

These assets provide essential social services infrastructure such as roads, transportation, and ports, where governments grant operating licenses or guarantee a certain level of revenue and usage fees to investors, thereby offering stable returns.

Most of the revenue is secured through government regulations and long-term contracts, ensuring a stable income structure and high cash flow for investment recovery. Typically, usage fees are linked to inflation, allowing for inflation hedging.

The investment targets operate in advanced countries such as the United States and Europe, where government regulations are conducted through relatively transparent procedures, providing predictability.

An NPS official stated, "We will continue to strive to secure investment opportunities in high-quality assets expected to generate long-term stable returns, such as commitments and co-investments in core funds launched by leading global asset managers in the future."