S.Korea's GEPS logs 10.2% return on alternative assets in 2022

South Korea’s Government Employees Pension Service (GEPS) had a 4.4% loss on investment last year, seeing its assets under management (AUM) drop 1.91 trillion won ($1.4 billion) to 6.2 trillion won. The pension fund’s alternative assets achieved a double-digit return while the other asset classes plunged amid inflation.

According to its end-February report, GEPS swung to the red in 2022 after posting an 8.4% return in 2019, 10.5% in 2020 and 8.6% in 2021. The negative return on investment last year came as the Federal Reserve accelerated tightening and global geopolitical tensions worsened, GEPS said.

The pension fund posted a 10.2% return from alternative assets and 7.7% and 18.9% losses from public bonds and equities, respectively. Indirect investment in domestic equities lost as much as 25.3%; direct investment in local equities and global shares investment saw 21.9% and 13.9% losses, respectively.

Alternative assets performed well last year despite the market downturn, according to the report. The asset class had positive returns in recent years, achieving 19.4% in 2021, 7.5% in 2020 and 8.5% in 2019.

The pension fund allocated 2.2 trillion won, or 35.2% of its AUM, to alternative investments last year. The proportions to bonds and equities were 35.6% and 24.4%, respectively. 

“We will expand our alternative investments by purchasing high-quality assets in the mid-to-long term and increase exposure to bonds, rather than equities, to achieve target returns and stable cash flow,” said a GEPS official.

The pension fund will focus on diversification of its portfolio this year, the official added.

Write to Jun-Ho Cha at chacha@hankyung.com

Jihyun Kim edited this article.