Investment by South Korea’s state-run pension fund in overseas properties jumped almost nine times this year, compared with that of the 2008 global financial crisis, according to data Monday, showing its effort to diversify its asset portfolio.
The investment in overseas real estate by the National Pension Service stood at 5 trillion won ($4.25 billion) as of the end of June, up from 564.2 billion won tallied at the end of 2008, according to industry data.
The NPS’s investment in overseas property has been on the steady rise as the world’s fourth-largest pension fund is making efforts to diversify its asset portfolio. In 2010, such investment amounted to 4.1 trillion won.
The NPS, South Korea’s biggest investor, had 343 trillion won worth of assets under its management as of the end of July.
It has increased the weight of its alternative investment with an aim to raise the portion to more than 10 percent of its total assets within five years. Around 6 percent of the NPS’s assets are currently invested in property and infrastructure assets.
The NPS has also displayed an avid appetite for foreign stocks and bonds, data showed.
The national pension fund’s investment in overseas bonds stood at 13.3 trillion won as of the end of July, up from 8.64 trillion won at the end of 2008. It injected 18.4 trillion won in foreign equity investment as of end-July, up from 9.9 trillion won tallied at the end of 2008.
Market watchers said that the NPS needs to diversify its asset portfolio in a bid to push up investment returns, but it should also be wary of assessing investment risks as global economic uncertainty is rising.
The NPS plans to inject 14 trillion won in equity investment at home and abroad next year. The fund is seeking to raise the portion of foreign equity investment to 8.1 percent next year from this year’s 6.6 percent. Its weight of domestic stock investment will be increased to 19.3 percent for 2012 from this year’s 18 percent.
(Yonhap News)
