Domestic Equities Drive 4.08% Total Return,
Cumulative Gains Surpass 787 Trillion Won
Overseas Assets See Valuation Losses Amid
U.S. Tariff Uncertainty and Exchange Rate Fluctuations
The National Pension Service recorded a fund management return in the 4% range in the first half of this year. Although returns on overseas assets were somewhat sluggish due to uncertainties such as U.S. tariff policies, this was offset by a return of over 30% in the domestic market.
On August 28, the Fund Management Headquarters of the National Pension Service announced that as of January to June this year, the fund's reserves reached 1,269 trillion won, an increase of 56 trillion won compared to the end of the previous year.
During this period, the return was provisionally tallied at 4.08% (money-weighted rate of return), with investment gains of 50 trillion won. As a result, the cumulative investment gains since the introduction of the National Pension System in 1988 have reached 787.5 trillion won.
The agency explained that, while the return on overseas assets denominated in Korean won was somewhat weak due to a weaker dollar caused by uncertainties such as U.S. tariff policies, domestic equities posted double-digit returns, raising the overall return.
In fact, returns by asset class were as follows: domestic equities 31.34%, domestic bonds 2.34%, overseas equities 1.03%, alternative investments -2.86%, and overseas bonds -5.13%, with domestic equities showing an overwhelming performance.
In the first half of this year, the Korean stock market continued its upward trend, driven by expectations for new government policies and the attractiveness of undervalued stock prices, which led to strong demand and pulled up the overall fund management return. The return outperformed the KOSPI's 28.01% by more than 3 percentage points during the same period.
Overseas equities showed a sluggish trend early in the year due to uncertainties over U.S. tariff policies and concerns about an economic slowdown, but as uncertainties gradually eased and technology stocks led the market, returns turned positive.
Domestic and overseas bonds benefited from a decline in market interest rates amid concerns about an economic slowdown caused by weak U.S. economic indicators. In the case of domestic bonds, valuation gains were realized due to falling interest rates. However, overseas bonds recorded valuation losses due to the decline in the won-dollar exchange rate.
The -2.86% return on alternative investment assets was mainly the result of interest and dividend income, as well as foreign exchange gains and losses due to fluctuations in the won-dollar exchange rate. Fair value assessments were not reflected.
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