NPS logs 9.1% return in H1 2023; recovered from loss in 2022

National Pension Service (NPS) of South Korea achieved a 9.1% return on investment during the first half of this year, with assets under management (AUM) reaching 983.1 trillion won ($741.9 billion), the world’s third-largest pension fund said in a preliminary report on Tuesday.

The pension fund saw 83.9 trillion won of profit during the first six months, recovering its worst-ever annual performance of a 79.6 trillion won loss from the last year.

Stock investments led the performance amid a slowdown of inflation and pause on rate hikes, NPS said. By asset class, overseas and domestic stocks respectively logged 17.2% and 17.1% returns. Overseas and local fixed-income posted 6.2% and 2.7%, respectively. Alternatives, such as private stocks, bonds and real assets, achieved a 5% return.

The stock investments outperformed the main Kospi 14.7% and the MSCI ACWI ex-Korea by 13% during the first half with easing expectations for a big rate increase, NPS said.

Bond yields slightly fell also due to lessening concerns on inflation and the Federal Reserve’s tightening, the pension fund said. The Korean government bond yield with three-year maturities dropped 6.9 basis points during the first six months, while the US 10-year Treasury yield declined 3.7 basis points in the same period.

The return on alternative investments primarily comes from interest and dividend income and currency exchange gains, NPS said. The US dollar against the Korean won rose 3.59% during the first half, it added.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com

Jihyun Kim edited the article.