NPS gains 5.8% in 5 months as CIO extends term

By Son Ji-hyoung
  • Published : Jul 30, 2021 - 17:44
  • Updated : Jul 30, 2021 - 17:44

The National Pension Service Chief Investment Officer Ahn Hyo-joon (National Pension Service)
South Korea’s public pension fund, the National Pension Service, gained a cumulative 5.8 percent in the first five months of this year, a preliminary estimate showed Friday.

This robust growth brought the value of the world’s third-largest pension fund to 892.3 trillion won ($775.9 billion) as of May, approaching the unprecedented 900 trillion won mark despite lingering COVID-19 uncertainties in the global capital market.

The news came a day after the NPS extended Chief Investment Officer Ahn Hyo-joon’s term by another year to October 2022 to reward his achievements since 2018.

Besides the fund’s performance this year, Ahn was recognized for generating a 9.7 percent return in 2020 despite pandemic-driven market uncertainties.

This was in line with the NPS’ historic high annual investment returns in 2019, 11.3 percent, which contributed to a one-year extension of his two-year term last year.

Also during Ahn’s tenure, the NPS has clinched strategic partnerships with institutional investors such as Dutch pension fund APG and Germany-based Allianz Group.

Ahn will become the NPS’ first top investment decision-maker to serve more than three years.

Commenting on the year-to-date performance in a statement, the NPS attributed it largely to the stock price recovery.

The NPS returned 13 percent from domestic stocks and yielded 14.3 percent from foreign stocks from January to May, as macroeconomic improvement coupled with a solid corporate performance pinned investor hopes on a sustained recovery.

Moreover, the weakened won against the US dollar during the January-May period translated into extra returns from the NPS’ overseas assets. From January to March, the dollar-to-won exchange rate rose 2.6 percent.

As a result, domestic bonds’ 1.5 percent loss stood in contrast with foreign bonds’ 0.6 percent return, amid the rising interest rate on global vaccination hopes and inflation woes. Its alternative assets yielded 3.5 percent thanks to interest and dividends from foreign assets.