[K-INVESTORS]⑩ Opening the Era of 1000 Trillion Won in the National Pension Service

National Pension Fund Size Exceeds 1,000 Trillion Won
From -8% Returns to Annual 100 Trillion Won Profit Turnaround
Investment Management History of Seowonju, Head of Fund Management Division

Editor's NoteThe Korean capital market is more turbulent than ever, driven by greed and selfishness. Manipulations and foul play are rampant. However, many investors have carved out their own investment worlds and emerged as role models for individual investors, having endured numerous crises from the foreign exchange crisis, dot-com bubble, global financial crisis, to COVID-19. Through meetings with these investors, we aim to convey the value of money through their war-like stories of the capital market, their philosophies, failures, and successes. Starting now, we bring you stories from experts across various fields?from value investing and activism to domestic pension fund CIOs who have become global 'big players,' to leaders of private equity and asset management firms, and CEOs of financial companies.

The scale of the National Pension Fund, which is the retirement fund for the people, has surpassed 1000 trillion won. Although official statistics are not yet available, as of December, the total size of the National Pension Fund has stably exceeded 1000 trillion won. Last year, the National Pension recorded a negative return in the 'minus 8%' range, becoming a nationwide concern. Amid the worst-ever performance, Seo Won-ju was appointed as the Chief Investment Officer (CIO) of the National Pension Fund Management Headquarters. He reversed the situation by working closely with the market throughout the year. The National Pension is expected to achieve a record-high profit of around 100 trillion won this year.

The President of the 1000 Trillion Won Capital Market... He Was Also a 'Stock Beginner' at First

When he joined Samsung Life Insurance (formerly Dongbang Life Insurance) in 1988, he barely knew what stocks were. The 1988 Olympics were held, and the stock index was heading toward 1000. The noisy atmosphere filled with rumors and hearsay made the stock trading team look interesting. On his first day as a new employee, knowing nothing, he joined the stock team, and the manager asked him,

"What do you want to buy?"

(If I say Hyundai Motor, it’s too obvious. What sounds a bit more sophisticated?)

"I want to buy Dongyang Chemical (OCI)."

He blurted out the name of the company where his friend worked.

At that time, stock trading terminals were distributed only one or two per institution.

"How many shares do you want to buy?"

"I want to buy 100,000 shares."

That evening, the securities firm called back. Only 10 shares had been executed. It turned out that fewer than 100 shares were traded daily for that stock.

The closing price was 200 won lower than the purchase price. A senior called him again.

"Do you know how much you lost today?"

"Multiply 200 won by 100,000 shares."

"20 million won..."

He was stunned. At that time, his monthly salary was 500,000 won. He went home that day and couldn’t sleep.

'What am I going to do from now on?'

Detached from Both Merit and Fault... Focusing on the Essence of Management

Thirty-five years later, he moves funds worth 1000 trillion won and is called the 'President of the Capital Market' as the National Pension CIO.

He is more detached than anyone else. He has personally experienced major crises such as the 1997 International Monetary Fund (IMF) foreign exchange crisis, the 2001 IT bubble burst plus 9/11 terrorist attacks, and the 2008 global financial crisis.

"It’s all my responsibility. Whoever was in this position before me, if the current returns are negative, it is my responsibility to be in this position now. Accepting it this way allows me to be devoted solely to my work without resentment or arrogance."

This is what Director Seo realized over 35 years of investment management. Only someone who understands the grave responsibility of managing others’ assets can say this.

Born in 1965, Director Seo joined Samsung Life Insurance in 1988 and worked in the overseas investment team, New York investment corporation, and Singapore investment corporation. In 2014, he moved to PCA Life Insurance (now Mirae Asset Life Insurance) as head of asset management. From 2019 to May 2022, he served as CIO at the Government Employees Pension Service, and since the end of last year, he has borne the heavy responsibility of managing the retirement assets of the people at the National Pension.

He was forged through numerous crises. He witnessed Korean financial firms, whose investment management history is relatively short, panic-selling during the 2008 financial crisis. When stock volatility increased, they indiscriminately sold assets at the bottom and later regretted it.

In contrast, overseas institutions like the Dutch civil servants’ pension fund, with nearly a 100-year history, followed prepared procedures when major crises occurred. They overcame crises through a systematic process of 'analysis-investigation-complement-report-response.' Observing this taught him valuable lessons. As CIO of Korea’s largest pension fund, the National Pension, these experiences form the foundation that allows him to trust his investment managers without being swayed by market fluctuations or chain reactions.

"The role of a leader in investment management is not to intervene in everything but to trust others."

He monitors dangerous factors such as large market volatility or chain reactions from behind the scenes.

Seowonju, Head of the National Pension Fund Management Headquarters
[Photo by National Pension Service]

The Secret to Investment Success is to Take the 'Opposite Position'

In the early days, his stock investments were driven by market rumors. Director Seo studied hard to find facts that move prices instead of rumors. Regardless of asset class, the principle of evaluating companies was the same. Ultimately, it is investing in the value of companies.

When it comes to judgment and decision-making, his mind is always busy. He thinks once more about positions opposite to his own. Endless simulations take place in his head.

He thinks in reverse based on the interests and backgrounds of the other party, not his own. The same applies to investing. No matter how attractive an asset looks or how much you want to buy it, there is always someone on the opposite side selling it.

'I want to buy, but why is the other side selling?'

Always considering the opposite position was a habit that once harmed his health but greatly helped his investing.

The rookie who trembled like a leaf over a 20 million won loss gained experience and came to oversee the entire operation including stocks, bonds, and alternatives. Working in the strategy department responsible for asset allocation helped him develop a comprehensive view of management. He even took charge of Asian regional investments at Samsung Life Insurance’s Singapore investment corporation.

Some CIOs specialize in one asset class such as stocks, bonds, or alternative investments before rising to the top, but Director Seo is different. He has a comprehensive perspective. This is also why CIOs from Samsung Life Insurance are highly regarded.

With the fund size surpassing 1000 trillion won, the status of the National Pension as one of the world’s top three pension funds has risen further. Only Japan’s Government Pension Investment Fund (GPIF, 1997 trillion won) and Norway’s Government Pension Fund (GPF, 1885 trillion won) are larger as of the end of June. The heavier the responsibility, the more Director Seo focuses solely on the essence of management and returns.

"Investment and the existence of a Chief Investment Officer are about delivering performance and managing risk. If I just follow investment guidelines, why would I be needed? We must think about the purpose of the guidelines. Over six months to a year, we check from multiple angles whether these guidelines worked properly, helped returns, or what would have happened if we hadn’t followed them. The essence is returns. I believe a leader’s role is to always think about the essence and ensure we don’t stagnate."

Seowonju, Head of the National Pension Fund Management Headquarters
[Photo by National Pension Service]