World's Third-largest in Size
The size of assets under management by South Korea's state pension fund surpassed the 600 trillion won (US$536.19 billion) mark for the first time.
According to the Ministry of Health and Welfare (MHW) and National Pension Service (NPS) on July 23, the total value of funds managed by the NPS reached 601 trillion won (US$537.09 billion) as of July 17, making it the world's third-largest in terms of size after Japan's Government Pension Investment Fund (GPIF) and Norway’s Government Pension Fund (GPF). The size of assets started at 530 billion won (US$473.64 million) in 1998 and surpassed the 100 trillion won (US$89.37 billion) market in 2003 for the first time. The figure increased by six times in 14 years since then.
The size of assets grew 7.71 percent in just seven months compared to 558 trillion won (US$498.66 billion) in fund reserves checked at the end of last year, and 4.16 percent in less than three months compared to 577 trillion won (US$515.64 billion) at the end of April this year.
Of assets controlled by the NPS, 48.3 percent are invested in various domestic bonds, including short-term funds, with shares in the local bourse accounting for 21.1 percent of the total. The service has 16.6 percent of its funds invested in overseas stocks and 10.3 percent in alternative investments and 3.7 percent in foreign bonds. The NPS and the ministry attributed the sharp increase in assets and earnings rate to the bull stock market where the main KOSPI market has begun a rally, boosted by the global economic recovery and performance improvement of domestic companies this year.
In fact, NPS’ earnings rate on investment in domestic stocks this year as of July 17 stood at 23.5 percent, which was 4 percent points higher than 19.67 percent of the increase in the KOSPI over the same period.
This is largely due to a continuous growth in its size of assets invested in domestic stocks and portion of domestic stocks in the total invested assets. It came after the NPS's Fund Management Committee passed the mid-term investment allocation plan during the 2018-2022 period in late May last year and decided to increase its holdings of local stocks. Under the plan, the NPS will further increase the proportion of domestic stocks from 18.3 percent at the end of last year to 18.7 percent late next year and 20 percent late 2022.