NPS logs 8.6% return on investment as of end-April 2023

South Korea’s National Pension Service (NPS) has logged an 8.63% profit in fund management in January-April this year thanks to strong equity and fixed-income performances, the pension fund said on Thursday.     

The world’s third-largest pension fund manages 975.6 trillion won ($741.3 billion) as of April 30, NPS said in a preliminary report. It saw 79.4 trillion won in profits during the first four months of this year, almost recovering from the worst-ever-loss made last year.   

Its overseas and domestic equity investments respectively achieved 14.72% and 13.87% profits from January to April. Global and local bonds posted 8.53% and 3.58% profits, respectively.

The stock and bond investments led the strong performance amid slowing inflation and expectations that the Federal Reserve’s tightening is nearing the end, NPS said. China’s reopening has also played a positive role in the equity and bond markets, the pension fund added.  

Domestic equity and bond returns in Korean won outperformed their benchmarks (BMs) by 0.19% and 0.11%, respectively. Global stock in the US dollar exceeded its BM by 0.33%, while overseas bonds underperformed the standard by 0.02%.

Since the fund management arm’s inception in 1999, it has achieved 531 trillion won in cumulative returns.

Alternative assets, such as stocks, debts and real assets in private markets, saw 6.2% profit. The January-April returns don’t reflect the asset class’ fair values that are assessed at the end of every year, NPS said.

NPS’ fund management allocates 43.3% of the assets to equity, 40.6% to fixed-income and 16.1% to alternative assets as of end-April.

The pension fund will invest 55% of its total assets in stocks, 30% in bonds and 15% in alternative assets during the 2024-2028 period, according to its five-year asset allocation plan on May 30.

The pension fund saw infrastructure perform well last year as returns from the assets are correlated to inflation, NPS infrastructure head Hwang Mi-ok said at last month's ASK conference.

The institutional investor will focus on risk management of the existing portfolio and will eye new investments in growth sectors such as digital infrastructure and energy transition this year, she added.

Write to Se-Min Huh at semin@hankyung.com

Jihyun Kim edited this article.