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| The headquarters of the National Pension Service (NPS) in Jeonju, North Jeolla Province / Yonhap |
State-run pension agency recovers 73% of last year's losses
By Anna J. Park
The National Pension Service (NPS), Korea's largest institutional investor, has recovered much of its investment losses incurred during the past year, as it posted a rate of return of 6.53 percent during the first quarter.
According to the NPS this week, it grossed over 58.4 trillion won ($44.1 billion) during the first three months of this year. With the first quarter's gains accruing, the total asset of the NPS is estimated at 953.2 trillion won, as of the end of the first quarter, which is an all-time high.
With the solid first-quarter performance, the national pension agency has succeeded in compensating about 73 percent of the annual loss of 79.6 trillion won from last year which was the worst annual performance ever. Amid soaring global interest rates and plunging asset prices, the NPS' annual rate of return stood at minus 8.22 percent in 2022.
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| The headquarters of the National Pension Service (NPS) in Jeonju, North Jeolla Province / Courtesy of NPS |
By category, local stocks held by the NPS performed the best with a return rate of 12.42 percent, followed by foreign stocks at 9.7 percent, foreign bonds at 5.38 percent, alternative investments at 3.49 percent and local bonds at 3.25 percent.
The NPS explained that a faster recovery of global financial markets yielded a positive rate of returns in both stocks and bonds, as well as alternative investments, higher than benchmark returns. The rate of returns of local stocks surpassed the benchmark index by 0.05 percentage points, while foreign stocks exceeded the benchmark by 0.57 percentage points. Both local bonds and foreign bonds all posted rates of returns higher than benchmark returns by 0.11 percentage points and 0.06 percentage points, respectively.
"Since the beginning of the year, both stocks and bonds showed a strong performance, resulting in the recovery of rates of returns. Markets' expectations regarding eased tightening, as witnessed in by the slowdown in inflation and U.S. Fed's mitigated key interest rate hikes, have positively influenced asset prices," the NPS said.
Kim Tae-hyun, chairman of the state-run pension agency, vowed to continue to yield sound performances by nimbly responding to the volatility of markets.
"The NPS will continue to put its utmost efforts to raise the profitability of its assets by further diversifying investments to respond to the increasing volatility of the markets," the chief of the NPS highlighted.
Since the pension service's foundation in the mid-1980s, it has grossed an accumulative profit of 509.4 trillion won.
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