Korea National Pension Fund Targets Overseas Stocks

Posted on 06/14/2013

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The largest public institutional investor in Korea is the National Pension Service. In recent times, the massive pension system sliced its five-year investment return target from 6.6% (2014-2018) down to 6.1% (2013-2017). Korea’s gross domestic product and inflation data influenced the return adjustment decision. As of March 2013, Korea’s National Pension Service (KNPS) assets total 406 trillion won (US$ 359 billion).

The KNPS has a 20% asset allocation to domestic stocks and owns nearly 6% of Korea’s public stock market.

Public pressure and an aging demographic, similar to Japan, have forced the KNPS to look abroad for investing. In 2014, KNPS plans to grow the allocation of overseas public equity to 10.5%, from 9.3% in 2013.

Progressively, public investors are allocating a greater proportion of assets overseas, lowering home allocation especially in fixed income. Gargantuan domestic investors have excessive exposure to home markets. Japan’s Government Pension Investment Fund signaled a major move to look beyond the shores of Japan.

Keywords: National Pension Service of Korea (KNPS).

• allocation
• Asia
• foreign stocks
• Korea National Pension Fund
• National Pension Service Korea
• Public Pension
• South Korea