NPS enjoys 9.2% return as of Q3 on bullish US stocks

The National Pension Service (NPS), South Korea’s largest institutional investor, reported a preliminary 9.18% return from investments, equivalent to 97 trillion won ($70 billion), during the first nine months of this year thanks to the robust performance of its foreign equity holdings, its report showed on Friday.

Thanks to the gain, Korea’s state-run pension fund operator’s assets under management (AUM) stood at 1,146.1 trillion won as of the end of the third quarter, retaining its status as the world’s third-largest pension fund.

The AUM figure includes 675.2 trillion won in cumulative investment income since the launch of the National Pension Plan in 1988, according to the report.

The gain was largely driven by the stellar performance of its global equity, especially US tech stocks, amid high expectations for the US Federal Reserve’s rate cuts to bolster the economy.

The US dollar’s 2.34% appreciation against the Korean won since the start of this year also helped improve the return on global asset investment, the NPS said.

Based on the US dollar, the global stock market climbed 19.40% since the start of this year, while Korea's benchmark stock index Kospi lost 2.34% over the same period.

The preliminary return on domestic and global fixed-income investments stood at 4.09% and 6.97%, respectively.

The return on alternative investment and domestic equity came in at 5.05% and 0.46%, respectively.

Because the return on alternative assets, including real estate, private equity and infrastructure, mainly reflects interest income, dividend income and foreign exchange gains from a strong greenback, changes in the valuation of investment assets are not reflected.

The fair value of alternative assets will be assessed at the end of the year, it said.

In 2023, the NPS logged a record-high return of 13.59%, equivalent to 126 trillion won, powered by the robust performance of both domestic and global equity.

In October, NPS Chairman Kim Tae-hyun announced that the NPS will increase its exposure to residential housing and data centers to exploit lower interest rates, which bodes well for the commercial property market.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com
Sookyung Seo edited this article.