[Exclusive] 'Overseas Stocks Are a Savior'... Public Officials' Pension Fund Return Rate Rises from -4.4% to 5.6%

Public Officials' Pension Fund Financial Asset Operating Income 421.7 Billion
Yield from -4.4% at Year-End to 5.6% in Q3
Overseas Stock Investment Yield Soars to 14.9%
"Selective Investment in Leading Stocks of Recovery-Strong Sectors"

The Government Employees Pension Fund significantly increased its returns through active overseas stock investments. Benefiting from the market's preference for risky assets, valuation gains occurred in the stocks held, and expanding investments by selecting stocks with steep price increases proved effective.

According to the investment banking (IB) industry and the Government Employees Pension Service on the 26th, the financial asset management profit of the Government Employees Pension Fund in the third quarter of this year was recorded at 421.7 billion KRW. The return rate was 5.6%, exceeding the initial target of 4.4% by 1.2 percentage points. At the end of last year, the fund's return rate was -4.4%, but it rose sharply to 4.0% in the first quarter and achieved a 5.4% return rate in the second quarter as well.

The fund's star performer was overseas stock investment. The third-quarter overseas stock investment return rate was 14.9% (121.9 billion KRW), far surpassing the target return rate of 5.3% (49.6 billion KRW). Compared to the -13.9% return rate at the end of last year, it increased by 28.8 percentage points. Thanks to the improved return rate, overseas stock assets grew from 811.7 billion KRW last year to 969.1 billion KRW in the third quarter, an increase of 157.4 billion KRW.

The pension service explained, “We achieved excellent management performance through active stock investment expansion amid the rising trend of major countries' stock markets, driven by expectations of global easing of tightening and recovery of risk asset preference sentiment,” adding, “We selectively invested in high-quality stocks with recovering business conditions and stocks leading price increases.”

Domestic stock investment also showed a favorable return rate of 13.2%. Last year, the domestic stock investment return rate was -23.2%, the lowest among all sectors. However, the positive trend continued with the return rate rising to 17.8% in the second quarter, and it is expected to comfortably exceed the target return rate of 5.1% by the end of the year.

On the other hand, bond investment performance was somewhat lackluster. The pension fund's bond investment return rate was 2.1%, turning upward from -7.7% at the end of last year, but it only reached half of the targeted 4.1% return rate. The return rate also declined from 3.2% in the first quarter to 2.7% in the second quarter. In particular, while domestic bond returns were 3.0%, overseas bond investments recorded a low -1.2%, dragging down the overall return rate.

Alternative investments achieved a 5.3% return rate, supported by stable dividend receipts from domestic real estate funds and private equity funds, as well as valuation gains from social overhead capital (SOC) listed funds. However, this was only half compared to 10.2% at the end of last year. The investment scale reached 2.2391 trillion KRW, an increase of 57.9 billion KRW from the previous year.

At the end of the third quarter, total assets amounted to 21.4691 trillion KRW, an increase of 634.8 billion KRW. Financial assets were 8.3362 trillion KRW, loan assets 4.2843 trillion KRW, and housing assets 5.8087 trillion KRW. Liabilities stood at 5.8782 trillion KRW, with student loan burdens accounting for 3.1347 trillion KRW. Total net assets increased by 473.3 billion KRW from the end of last year to 15.5909 trillion KRW.