National Pension Service (NPS) of South Korea achieved a 9.1% return on investment during the first half of this year, with assets under management (AUM) reaching 983.1 trillion won ($741.9 billion), the world’s third-largest pension fund said in a preliminary report on Tuesday.
The pension fund saw 83.9 trillion won of profit during the first six months, recovering its worst-ever annual performance of a 79.6 trillion won loss from the last year.
Stock investments led the performance amid a slowdown of inflation and pause on rate hikes, NPS said. By asset class, overseas and domestic stocks and domestic respectively logged 17.2% and 17.1% returns. Overseas and local fixed-income posted 6.2% and 2.7%, respectively. Alternatives, such as private stocks, bonds and real assets, achieved a 5% return.
The stock investments outperformed 14.7% of the main Kospi and 13% of MSCI ACWI ex-Korea during the first half as expectations for a big rate increase had eased, NPS said.
Bond yields slightly fell as the expectations on inflation and the Federal Reserve’s tightening had eased, the pension fund said. The Korean government bond yield with three-year maturities dropped 6.9 basis points during the first six months, while the US 10-year Treasury yield declined 3.7 basis points in the same period.
The return on alternative investments primarily comes from interest and dividend income and currency exchange gain, NPS said. The US dollar against the Korean won rose 3.59% during the first half, it added.
Write to Byeong-Hwa Ryu at hwahwa@hankyung.com
Jihyun Kim edited the article.
