NPS returns shift to positive on stock market rebound

The National Pension Service has posted a 0.37% return as of the end of May, cancelling out the negative return of the previous four months as the rebounding stock markets helped reduce losses from the equities portfolio, according to its official announcement on July 30.

The rise in the dollar/won exchange rate boosted overseas investment gains, and a drop in interest rates on the back of eased monetary policy measures increased valuation gains for domestic and overseas bonds. The US dollar to won exchange rate saw a 7% increase between January and the end of May.

Up to April, the pension fund had remained in the negative range posting minus 2.57% in returns due to the global coronavirus pandemic that triggered a global economic slowdown.

By asset class, domestic and overseas equities posted minus 6.18% and minus 2.63%, respectively as of the end of May. That compared with minus 10.21% for domestic equities and minus 9.43% for overseas equities a month before.

The cumulative returns are comparatively sound, in light of the stock market performance in the January to May period during which the Korea's stock market index KOSPI dropped by 7.65%, and the MSCI ex-Korea lost 9.13% in dollar terms.

Domestic bonds posted 2.27% and overseas bonds posted 10.59% in returns, respectively, up from 1.25% and 8.80% in the first four months of the year.

Alternative assets posted 5.96% as of the end of May, for which the annual mark to market value was not reflected in the year-round returns.

As of the end of May, the NPS's assets under management have reached 749.2 trillion won ($629 billion). Since its inception, the pension fund has posted average accumulated returns of 5.29%, and accumulated proceeds worth 370.2 trillion won.

Write to Jung-hwan Hwang at jung@hankyung.com