National Pension Service Posts 6.35% Return in Q1... Recovers Significant Portion of Last Year's Losses

Financial Market Rally Amid Inflation Easing and Tapering Pace Adjustment
Profit of 58.4 Trillion, Cumulative Operating Profit of 509.7 Trillion, Reserve Fund of 953.2 Trillion

The National Pension Service Fund Management Headquarters announced on the 30th that the National Pension Fund's rate of return reached 6.35% (provisional) by the end of the first quarter of this year.

During this period, the earnings amounted to 58.4 trillion KRW, the cumulative operating earnings since the fund's establishment totaled 509.7 trillion KRW, and the fund valuation was recorded at 953.2 trillion KRW. In just three months this year, a significant portion of the 2022 annual rate of return (-8.22% provisional) and valuation loss (79.6 trillion KRW provisional) was recovered.

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Since the beginning of the year, despite the crisis in overseas small and medium-sized banks and recession concerns, the global financial markets showed strength in both stocks and bonds, leading to a recovery in returns. The easing of inflation and expectations of a slower pace of tightening, such as a reduced increase in the Federal Reserve's benchmark interest rate compared to the previous year, positively influenced the market.

Looking at the rate of return by asset class (based on amount-weighted returns), domestic stocks recorded 12.42%, overseas stocks 9.70%, domestic bonds 3.25%, overseas bonds 5.38%, and alternative investments 3.49%.

Domestic and overseas stocks showed favorable returns due to risk appetite driven by expectations that the Federal Reserve would slow the pace of interest rate hikes despite concerns such as the U.S. banking sector crisis. Domestic and overseas bonds also saw notable declines in interest rates as expectations grew for the end of tightening following the Federal Reserve's rate hikes.

For alternative investments, most of the returns were from interest and dividend income and foreign exchange gains due to the rise in the KRW-USD exchange rate. The valuation of alternative investment assets will be conducted at the end of the year.

Traditional asset returns in the first quarter outperformed the benchmark returns (BM). Compared to the BM, domestic stocks exceeded by 0.05%p, overseas stocks by 0.57%p, domestic bonds by 0.11%p, and overseas bonds by 0.06%p.

Chairman Kim Taehyun stated, “Despite significant global economic uncertainties due to monetary tightening effects and recession concerns in major countries, we recorded favorable returns,” adding, “We will continue to respond to increased market volatility and pursue investment diversification to enhance returns.”