With the KOSPI index surpassing the 7,300 level, the National Pension Service fund is estimated to have exceeded 1,700 trillion won. So far this year alone, it has increased by about 250 trillion won, nearly 90 trillion won in two months.
According to related ministries and the financial investment industry on the 6th, the National Pension Service fund is expected to have surpassed 1,700 trillion won as of the day. This is believed to have been helped by the rise in share prices of domestic stocks held by the National Pension Service. The KOSPI index closed at 7,384.56, up 6.45% from the previous trading day, after topping 7,000 points for the first time ever on the day.
Lee Seu-ran, the First Vice Minister of the Ministry of Health and Welfare, said at a symposium titled "Desirable asset allocation strategies for pension funds" held at the Korea Financial Investment Association that "I think the National Pension Service (fund size) will exceed 1,700 trillion won as of today."
As of the end of February this year, the National Pension Service fund stood at 1,610.4 trillion won. It has grown by nearly 90 trillion won in about two months. Compared with the end of last year (about 1,473 trillion won), it is estimated to have earned 250 trillion won so far this year. As of the end of February, 24.5% (395.1 trillion won) of the National Pension Service's assets were in domestic stocks, the second-largest asset class after overseas stocks (35.6%).
The Vice Minister explained that while this performance was thanks to the recent surge in the domestic stock market, "strategic asset allocation (SSA) contributes more than 90% of the performance." However, the Vice Minister noted that, as the financial market has become more complex recently, there are concerns about maintaining the asset allocation system. The Vice Minister added that there is deliberation over the appropriate investment weight for domestic stocks and other assets.
Meanwhile, at the symposium, there were views on revising future asset allocation strategies for domestic pension funds. John Campbell, a professor of economics at Harvard University, pointed out the limits of relying solely on statistical figures in investment management and stressed that decision-making should flexibly combine economic theory and statistical evidence. He then analyzed the current structural changes in the financial market through shifts in the bond‑stock correlation and other factors.
Lee Hyo-seop, head of the financial industry division at the Korea Capital Market Institute, proposed that, in response to the environment of high inflation, high interest rates, and a high exchange rate and demographic changes, domestic pension funds need to introduce a total portfolio approach (TPA) that considers asset‑liability management (ALM).
In addition, to boost long-term returns, he argued for establishing a rational currency hedging policy for each fund and reviewing an increase in the target allocation to domestic stocks in light of a KOSPI re‑rating.