S. Korea's national pension fund to up stock investment in 2015

South Korea's national pension fund plans to raise its stock investment in 2015 while cutting its exposure to safer assets in a bid to boost its return, the welfare ministry said Friday.

According to the ministry, the National Pension Service (NPS), among the world's big four pension operators, will raise the portion of local stocks in its overall investment portfolio to 20 percent next year from 19.7 percent at the end of last year, while slashing its exposure to local bonds to 52.9 percent from 56.1 percent over the cited period.

The pension operator also plans to raise the portion of overseas stocks and so-called alternative investment to 11.6 percent and 11.5 percent, respectively, by next year, from 10.4 percent and 9.4 percent in 2013, according to the ministry.

Consequently, the NPS is expected to additionally invest a combined 24 trillion won (US$23.6 billion) in local stocks and bonds next year, 10 trillion won in overseas stocks and bonds, and 4 trillion won in alternative investment, it said.

The pension fund is expected to have 532 trillion won worth of assets under management by next year, up 9.87 percent or 47.8 trillion won, from this year's estimated 484.9 trillion won. At the end of last year, the comparable figure was 425 trillion won.

Last month, the NPS, the country's largest institutional investor, said it will raise the portion of stocks in its overall investment portfolio to over 35 percent by 2019 from the 30.1 percent at the end of last year.

In return, the portion of safer bonds will be cut to below 55 percent from 60.1 percent, it said. 

With the realignment of its assets, the pension fund will aim for a 5.8 percent return on its investment on average for the next five years, it said.

In particular, the pension fund plans to sharply raise its investment in overseas stocks to over 15 percent of its investment portfolio by 2019 from the 10.4 percent at the end of last year.

The NPS logged a 4.16 percent return on its investment last year. It did not provide comparable figures for the past few years.

The country's key stock index, the KOSPI, garnered a meager 1 percent gain last year. (Yonhap)