NPS picks Allspring, BlackRock, Morgan Stanley for multi-assets in Q4

National Pension Service (NPS) of South Korea said on Feb. 28 it hired Allspring Global Investments LLC, BlackRock Inc. and Morgan Stanley Investment Management (MSIM) Inc. in the fourth quarter of 2021 for the pension fund’s first multi-asset investment firms. The world’s third-largest pension fund said it has deployed a combined $1.5 billion of capital, $500 million to each investment firm.

US-based Allspring manages $587 billion in assets, focusing on multi-asset solutions, defined contribution plans, target date investment, retirement income and others. BlackRock, the world’s largest investment firm managing $10 trillion in assets, operates multi-asset strategies across global equity, fixed income, currency, commodities and alternative investment markets. MSIM, with a $1.6 trillion AUM, uses various multi-asset strategies including absolute return, global tactical asset allocation (TAA), multi-asset income and dynamic value.

NPS conducted an initial evaluation for some overseas multi-asset investment firms during the first half of 2021. The pension fund underwent quantitative and qualitative analysis and due diligence to select the three investment firms, it stated on Monday.  

The pension fund’s multi-asset investment is a preparatory stage for introducing tactical asset allocation (TAA) overlay strategy, NPS said. The strategy, broadly used by pension funds in North America and Europe, actively manages portfolios for extra values by adjusting shareholding percentages in equities, bonds and other assets.

Once introducing the strategy, NPS will quickly respond to market trends while reducing changes to its investment portfolios, the pension fund stated. The strategy could boost the efficiency of investment management by minimizing the impact of market shock and opportunity costs, as well as enhance investment diversification.

“NPS and the three investment firms have agreed to build platforms for advancing our TAA system. We will develop economic and market indicators, create a quantitative assessment model for asset allocation and operate programs for successful partnerships,” the pension fund’s Chief Investment Officer Ahn Hyo-joon said.

On Monday, NPS announced its annualized return in 2021 was 10.86%, the second-highest record following an 11.3% return in 2019. The alternative investment generated a 23.97% return, thanks to gain on valuation of private equities and bonds and exits from some domestic real estate assets. The pension fund’s AUM increased to 948.7 trillion won ($786.3 billion won), 115 trillion won up from 2020. 

Write to Jae-fu Kim at hu@hankyung.com
Jihyun Kim edited this article.