NPS’ annual return marks 4.75 percent in 2016

South Korea’s state pension fund said its annual investment return inched up by 0.18 percent to 4.75 percent in 2016 from a year earlier.

According to the National Pension Service, the size of its fund swelled to 558.29 trillion won ($493.74 billion) as of the end of 2016, up 9 percent from 512.3 trillion won a year earlier.

Out of its total assets, 557.7 trillion won is being managed in the financial sector.

More than half of the fund, or 50.7 percent, is invested in local bonds, 18.4 percent in local stocks, 15.4 percent in foreign stocks, 4.2 percent in foreign bonds, 7.5 percent in overseas alternative investment and another 3.9 percent in local alternative investment, the NPS said.

The highest return of 12.34 percent yield came from overseas alternative investment last year, followed by a 10.13 percent return in overseas stocks, 5.74 percent in local alternative investments and 4.01 percent from global stocks.

The average annual return in the five year period between 2012 and 2016 was 5.07 percent, and in the 10 year period between 2007 and 2016, 5.38 percent, the NPS said.

At a meeting in Seoul earlier in the morning, the fund management committee of the NPS decided to increase its direct management of foreign stocks by lowering the target ratio of global stocks managed by outside asset managers to 55-75 percent from the current 65-85 percent.

The change comes as the NPS plans to increase its allocation of the fund in overseas assets from 27.1 percent at the end of 2016 to more than 35 percent in 2021.

The NPS lost 30 fund managers last year and another 11 left or tendered resignation this year, apparently due to the fund management office’s relocation from Seoul to Jeonju, North Jeolla Province late this month.

To secure competent fund managers, the NPS will gradually raise salaries from the current level of an average of the private market to an average of the top 25 percent salaries of the private market, it said.


By Kim Yoon-mi (yoonmi@heraldcorp.com)