Korean pension fund makes mark on international market; enjoys yields
The national pension fund administered by the National Pension Service is reported to be entering a phase of significant expansion. Much of the increase is expected to be in the overseas investments that are within the fund, with the goal of achieving both diversification and growth in their international portfolio. In addition to this expansion in the financial portfolio, it is also reported that the service is additionally expanding its global administrative base, principally with the creation of a new office, which is to be located in London.
The anticipated managed growth of the pension fund seems likely to be focused on equities and real estate. This remains within the framework of a wider strategy of fund investment, as the NPS seeks to maximise its potential during the current global economic downturn. Non-financial investments such as international social development projects will also continue to grow within the fund, according to reported comments by the chairman of the NPS, Jun Kwang-woo.
According to reports, the service has the equivalent of more than $300bn, from which to finance the expansion of its financial interests. The current overseas portfolio has been calculated to be in the region of roughly $36bn, and the expansion seems set to aim to double this figure as far as overseas investments are concerned.
The size of the overall pension fund means that the current expansion puts the national pension fund in a position to be one of the largest three such funds in the world, which would improve on its current position as the fourth largest in the world. The size of the fund and the projected expansion also reflect how the NPS, in 2009-2010, has managed to achieve a yield on investment that is in the region of four percent higher than yields that were generated in the years prior to this.