Last year, the National Pension Service (NPS) fund recorded an operating return of minus (-) 8.22%.
On the 2nd, the NPS Fund Management Headquarters announced that as of the end of 2022, the National Pension Fund reserves were tentatively estimated at 890.5 trillion won, showing a return of -8.22% during this period.
The return rate (tentative) disclosed by the National Pension Fund mostly reflects unrealized losses rather than realized losses, and if the investment environment improves, the unrealized losses can also recover.
In February 2023, the financial sector return of the National Pension Fund recorded around 5% (tentative), and the total reserve fund size has recovered to the 930 trillion won level.
The poor return last year was due to the tightening of monetary policy and the global financial market tightening caused by the Russia-Ukraine war. The expansion of alternative investments and foreign exchange gains from the strong dollar helped reduce the extent of losses.
The return by asset type (based on amount-weighted return) was tentatively estimated as follows: domestic stocks -22.76%, foreign stocks -12.34%, domestic bonds -5.56%, foreign bonds -4.91%, and alternative investments 8.94%.
In detail, domestic and foreign stocks saw a decline in the valuation of managed assets due to persistent market instability factors both domestically and internationally, caused by the Federal Reserve's aggressive tightening policy amid worsening inflation and the prolonged war.
Domestic and foreign bonds experienced lower returns as interest rates sharply rose (bond valuation declined) due to concerns over sustained inflationary pressures and continued monetary tightening.
Alternative investment assets showed higher returns compared to traditional assets due to increased valuation of real estate and infrastructure assets, realized gains, and the rise in the KRW-USD exchange rate.
Director Kim Tae-hyun stated, "Last year, an unusual situation occurred where both the stock and bond markets performed poorly due to increased external uncertainties," adding, "In 2023, as the financial market shows signs of recovery, the National Pension Fund's returns are expected to improve."
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