South Korea’s National Pension Service (NPS) has decided to increase its proportion of overseas investment by 40 percent by the end of 2022 as part of its plan to achieve stable investment returns through diversification of investments.
During a briefing session held at a branch office of the NPS in Jeonju on Feb. 26, Lee Su-cheol, head of Investment Strategy at the NPS, said, “We are planning to boost our percentage of foreign investment from 27.9 percent at the end of 2017 to 40 percent at the end of 2022. We will spread our investment risk by establishing a global portfolio, such as London, Hong Kong, Sydney, Los Angeles and New York, as soon as possible to stably manage the fund.”
The NPS invested mostly in domestic bonds and stocks – 47 percent in domestic bonds, 21.4 percent in domestic stocks, 17.4 percent in foreign stocks, 10.2 percent in alternative investment and 3.9 percent in foreign bonds – as of the end of November 2017.
The NPS is currently investing in 131 trillion won (US$122.03 billion) worth of foreign stocks and bonds, which accounts for more than 20 percent of the total investments. It has invested 108 trillion won (US$100.61 billion) in foreign stocks, including 7,000 companies in 65 countries, and 23 trillion won (US$21.43 billion) in foreign bonds. The NPS has left the management of its foreign stock assets to 48 financial firms, such as JP Morgan and BlackRock, and its foreign bond assets to 35 companies, including Morgan Stanley.
An official from the NPS said, “The NPS has made investments all over the world like Asia, Europe and the Americas. Its investments are creating profits around the clock just like the British Empire whose sun never sets in the 17th century. The NPS achieved 9.8 trillion won (US$9.13 billion) of profits through the investment in foreign stocks and bonds last year.”
Meanwhile, the NPS invested 131 trillion won (US$122.06 billion) in domestic stocks, which accounts for nearly 7 percent of the total market cap of 1,888 trillion won (US$1.76 trillion). It made 27 trillion won (US$25.16 billion) of profits by investing in domestic stocks last year. The cumulative profits of the NPS is tentatively estimated at 300 trillion won (US$279.46 million).