NPS’ direct investment profits 3.48%

National Pension Service outperforms assets managers on profits


Direct investments made by the National Pension Service are marking steady profits in the fluctuating stock market, according to NPS officials.

The accumulative profit rate of the service’s direct investment in local stocks marked 3.48 percent for the five first months of the year, they said. The figure is far higher than the profit rate of the KOSPI, which marked 0.97 percent.

Direct investment in the KOSPI made by the NPS was more profitable than the investment carried out for it by asset management firms. Local asset management firms consigned to invest NPS operating funds brought in an average profit of 1.48 percent.

The asset management firms invest in a broader array of stocks. With its total operating fund of 364 trillion won ($320.7 billion), the NPS directly invests 32 trillion won into blue-chip stocks in the KOSPI 200 and 30 trillion won in various local stocks including those in the KOSDAQ through local asset management firms. Last year, the profit rate of NPS’ direct investment was lower than that of local asset management firms.

Analysts said that NPS took a long-term view in making direct investments and the strategy was notable especially as the stock market is fluctuating due to the European financial crisis and world economy stagnation. Less volatile large-cap blue-chip stocks have been profitable in the recent stock market, they said.

“NPS invested in local stocks like Korea Electric Power Corporation, KT or SK Telecom in consideration of dividend, and made relatively high profits,” a high-level official at a local asset management firm quoted as saying by Yonhap News.

Large-cap stocks in fact made an increased profit by 5 percent this year while that of small-cap stocks lowered by 4 percent.

An official at a different local asset management firm said, however, that NPS always maintained the same style in terms of investing and the profit rate of its direct and indirect investment were reversed only because the market situation changed.

An NPS official also added that as there are times when large-cap stocks are profitable, small-cap stocks were profitable in other times.

“Direct investment and trustee investment are complementary,” said the official, quoted by Yonhap News.

By Park Min-young  (claire@heraldcorp.com)