NPS to bump up alternatives proportion to 15% by end-2023

The National Pension Service (NPS) will raise the proportion of alternative investments from last year’s 10.8% to around 15% by end-2023 when its assets under management are expected to exceed 1,000 trillion won ($931 billion), according to the Ministry of Health and Welfare.

Under the mid-term asset allocation plan for the 2019-2023 period, alternatives will represent 12.7% of the NPS’ projected AUM of 729.5 trillion won by the end of next year, or 92.6 trillion won in value, the ministry said in a statement on May 30. It was released just after the ministry presided over a regular committee meeting to discuss the pension fund’s asset management plans.

The average target return for the 2019-2023 period was set at 5.3%, slightly higher than the 5.1% target for the 2018-2022 period.

NPS chairman and chief executive Sung-joo Kim said in the ASK 2018 Global Private Equity & Debt Summit on May 29 that the pension scheme will increase the share of cross-border investments to 40% from the current 29%.

Meanwhile, the proportion of domestic equities in 2019 will be reduced below that of overseas stocks for the first time in the its history.

NPS aims to trim the ratio of domestic equities from this year amid caution about its growing clout in local stock markets and in an effort to diversify portfolios for better returns.

By Chang Jae Yoo

yoocool@hankyung.com