The National Pension Service, which manages the public's retirement funds, steadily increased its allocation to overseas stocks over the past 10 years, lifting its investment return. In particular, the past three years marked the highest returns since the fund management headquarters was launched.
It is the result of shifting from a past focus on safe assets (domestic and overseas bonds) to a strategy centered on overseas stocks and alternative investments, moving into an "aggressive investment" stance. With low birthrates and an aging population hastening the depletion of pension funds, the National Pension Service effectively pushed back the depletion timeline by boosting its investment returns.
Recently, as the KOSPI surged on a super-boom in semiconductors, the National Pension Service sharply raised its allocation to domestic stocks, which it had been reducing. Observers say the pension's asset allocation strategy is at a turning point.
ChosunBiz's analysis on the 1st of the National Pension Service fund management headquarters' investment portfolios and investment returns by asset over the past 10 years showed that, except for 2018 (-0.92%) when the U.S.-China trade war erupted and 2022 (-8.22%) when the Russia-Ukraine war broke out, the fund posted positive returns in eight years.
Notably, in five years it achieved double-digit returns, and the average annual return for the three years after 2022—the worst year since the fund management headquarters was launched—(2023–2025) reached 15%. That is unusual even compared with major global pensions. In 2024–2025, for two consecutive years, the National Pension Service recorded higher returns than Japan's public pension (GPIF) and Norway's sovereign wealth fund (NBIM).
With domestic and overseas stock markets rallying, the National Pension Service's fund management return in the first quarter (January–March) this year is also strong. The first-quarter return was 4.42%, with about 65 trillion won in investment gains. While overseas stocks (-0.11%) and domestic bonds (-2.03%) underperformed due to the impact of the U.S.-Iran war, domestic stocks (21.67%), along with overseas bonds (4.98%) and alternative investments (5.27%), lifted overall returns.
The sharp improvement in performance is attributed to changes in asset allocation that reduced investments in bonds—safe assets—and increased allocations to overseas stocks and alternative investments. As concerns rose over a concentration in low-revenue assets, the National Pension Service shifted its portfolio toward stocks to enhance long-term performance.
Accordingly, the combined target allocation for domestic and overseas stocks rose from 38% in 2019 to 55.5% in 2026, while the share of domestic and overseas bonds fell from 49.3% to 29.5% over the same period.
In particular, overseas stocks are cited as a key asset that lifted the National Pension Service's returns. Overseas stocks posted high returns of 30.63% in 2019, 29.48% in 2021, 23.89% in 2023, and 34.32% in 2024, delivering the strongest performance in most years except 2018 (1.64%), 2020 (10.22%), and 2022 (-12.34%).
The share of overseas stocks in the overall portfolio also steadily increased. Overseas stocks, which amounted to 108 trillion won in 2017, surpassed 250 trillion won in 2021, then reached 300 trillion won in 2023, 400 trillion won in 2024, and 557 trillion won as of the end of March this year. The target allocation by asset started at around 20% in 2019, exceeded 30% in 2023, and expanded to about 35.9% in 2025. From 2024, it became the No. 1 asset by share.
Domestic bonds long held a large share within the National Pension Service, but their contribution to overall performance was limited due to relatively low returns. In fact, domestic bond returns stayed in the 3% range in 2018–2019 and the 1% range in 2020, and recorded losses of around 5% in 2022 and 2024.
What stands out is that domestic stocks, whose allocation had been steadily declining, unusually grew in presence in the National Pension Service's portfolio this year. The fund had been consistently reducing its allocation to domestic stocks. The share of domestic stocks, which was 18.0% in 2019, fell to 14.9% last year.
However, as the KOSPI recently led major global markets in gains and continued a rally, the fund decided to sharply expand this share. This year's target allocation for domestic stocks was adjusted to 20.8%, up 5.9 percentage points from 14.9%.
The fund committee said it "considered the potential for structural changes in the domestic stock market due to amendments to the Commercial Act," adding it was a decision "to enhance the fund's long-term profitability and stability and to mitigate market impact from rebalancing (ratio adjustments)."
With the semiconductor boom and the resulting stock market rise, the National Pension Service's domestic stock return came to 82.44% in 2025 and 21.67% in the first quarter this year. The asset size also stayed in the 140 trillion won range through 2024, when the KOSPI remained in a long box range, but after a bull run, it surpassed 260 trillion won in 2025 and reached 321 trillion won as of the end of March this year.
Accordingly, the allocation to overseas stocks, which had been steadily expanded, was slightly reduced. The National Pension Service's overseas stock target allocation for this year was initially 37.2%, but it was lowered to 34.7%.