The National Pension Service, the country’s pension fund operator, is gearing up to boost its overseas portfolio by increasing its investments in the global capital markets and alternative assets.
Its move to further expand its overseas holdings comes as it seeks higher returns through diversification amid an increasing number of pension earners as Korea’s population rapidly ages.
Its investments in stocks and bonds not only in advanced markets but also in emerging markets will be able to help the NPS access and gain higher-yielding assets, while offset risks of only holding domestic equities and fixed-income securities.
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Aurora Place in Australia |
The pension manager will also boost investments in alternatives such as infrastructure and real estate as those long-term assets can give stable returns, compared to stocks and bonds which are exposed to market volatility, and help it hedge inflation risks, the NPS said.
In 2011, the NPS gained returns of minus 9.46 percent on its stock holdings, while earning 10.22 percent on alternative assets, it said.
Its notable alternative investments since 2008 include Aurora Place, an office tower in Australia, and Gatwick Airport in Britain.
It will furthermore seek to invest in promising start-ups in line with its alternative investment plans, as well as to support young venture firms to be part of the creative economy development in Korea.
The NPS invested more than 64 trillion won ($58 billion) in overseas assets in 2012, accounting for about 16 percent of the fund under its management, and 327.5 trillion won in domestic assets.
Overall, it was able to achieve returns of almost 7 percent on its assets both at home and abroad, compared with 6.42 percent for teachers’ fund and 3.5 percent for public employees’ pension fund, according to the NPS.
By Park Hyong-ki (
hkp@heraldcorp.com)
