NPS harvests record yield in 2019

The National Pension Service, South Korea’s largest public pension fund, reaped record investment return in 2019 largely thanks to a bull run in overseas stock markets, its preliminary data showed Thursday.

Its annual rate of return came to 11.31 percent last year, the highest since the launch of NPS Investment Management in 1999, followed by 10.39 percent in 2009 and 10.37 percent in 2010.

Over the past year, it earned 73.4 trillion won ($60.4 billion) return, which is 1.5 times larger than the total yearly contribution from 22 million insurers. As a result, NPS was overseeing 736.7 trillion won assets as of end-2019.

The record run was mainly attributable to a global stock market rally coupled with monetary expansion efforts, which offset external uncertainties from trade feuds, NPSIM said in a statement.

By asset class, overseas stocks showed the highest returns at 30.6 percent, followed by Korean stocks (12.6 percent), foreign bonds (11.9 percent) and alternative assets (9.6 percent).

In particular, benefits from overseas stock rallies were supported by signs of thawing US-China trade war and the strengthened US dollars. The dollar-denominated MSCI ACWI index ex-Korea rose 26.8 percent in 2019, while the greenback rose 3.6 percent against the Korean won.

When it comes to returns from Korean stocks, NPSIM cited a recovery of export-oriented industry sectors like semiconductors. Korea’s benchmark bourse Kospi surged 7.7 percent in 2019.

NPSIM also noted that the yield comes as the pension fund was shying away from low-yield products like bonds.

Over the past 10 years, NPS’ exposure to bonds at home and abroad fell 29.5 percentage points, while those of stocks jumped 22.8 percentage point. Alternative exposure also rose 7 percent.

By Son Ji-hyoung (consnow@heraldcorp.com)