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Asset allocation

NPS logs positive H1 return led by fixed incomes, alternatives

Aug 28, 2020 (Gmt+09:00)

The National Pension Service eked out a 0.5% return on financial investments in the first half of this year, supported by solid gains from fixed-income and alternative investments, the South Korean pension fund said on August 28.

A strong rebound in stock markets during the April-June quarter sharply narrowed losses from equities portfolios, which suffered a more than 30% plunge in March alone in the wake of the coronavirus outbreak.

In the first three months to March, NPS reported a negative return of 6.08%, offsetting its 2019 return of 11.31%, that was its highest in history.

“During the first half of 2020, NPS reported a negative return at one point as the global spread of coronavirus brought an unprecedented shock to financial markets,” NPS said in a statement. “But thanks to our diversified portfolio and risk management, we recovered and achieved a positive return as of the end of June."

A string of stimulus measures unveiled by developed countries and loosened monetary policies provided a support to stock markets, while pulling interest rates lower. Lowered bond yields and the firmer won against the dollar boosted valuation gains from fixed-income securities.

By asset type, both domestic and global fixed-income securities reported positive returns during the first six months to June, outperforming their benchmark indices.

200828-nps-h1-table-2nd

Investment gains from alternative assets are based on their interest and dividend incomes, without reflecting mark-to-market assessments, which occur annually at the end of the year.

The world’s third-largest pension scheme managed 752.2 trillion won ($634 billion) in assets as of the end of June, up 15.5 trillion won from the end of last year.

By Jung-hwan Hwang

jung@hankyung.com



 

Yeonhee Kim edited this article

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