Last year, the National Pension Service (NPS) struggled with negative returns but has shown a strong recovery this year, returning to positive returns for the first time in 13 months.
According to the National Pension Service on the 1st, the overall return of the National Pension Fund for January this year was tentatively estimated at 2.74%.
Since the beginning of the year, both domestic and overseas financial markets have shown strength in stocks and bonds due to eased concerns about an economic recession following the rapid interest rate hikes by the U.S. Federal Reserve (Fed) that continued from the previous year.
By asset class, domestic stocks recorded 8.37%, foreign stocks 3.46%, domestic bonds 2.7%, foreign bonds -0.81%, and alternative investments -1.76%.
Domestic and foreign stocks rebounded as the pace of monetary tightening slowed and expectations for China's reopening of economic activities increased, leading to a rise in operating returns.
In particular, domestic stocks continued their upward trend, driven by sustained inflows of funds due to risk appetite, mainly in sectors with strong performance.
Domestic and foreign bonds saw bond valuation gains as interest rates fell amid easing inflation and expectations of shifts in monetary policies across countries. The U.S. dollar weakened due to expectations of a slowdown in U.S. interest rate hikes, and foreign bonds incurred valuation losses due to a decline in the KRW-USD exchange rate.
The returns on alternative investment assets were mostly due to interest and dividend income and foreign currency translation losses caused by the decline in the KRW-USD exchange rate. Since fair value is assessed once annually at the end of the year, the returns during the year do not reflect the fair value assessment amount.
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