The National Pension Service, which manages the public's retirement funds, steadily expanded its allocation to overseas stocks over the past 10 years, lifting its investment return. In particular, over the past three years it posted the highest return since the launch of the National Pension Service Investment Management.
This is the result of shifting from a past focus on safe assets (domestic and overseas bonds) to an emphasis on overseas stocks and alternative investments, moving into an "aggressive investment" stance. As low birthrates and an aging population accelerate the depletion timeline, the National Pension Service effectively pushed back that timing by raising its investment return.
Recently, as the KOSPI jumped on a super-boom in semiconductors, the National Pension Service sharply raised its allocation to domestic stocks, which it had been trimming. Observers say the National Pension Service's asset allocation strategy has reached a turning point.
On the 1st, ChosunBiz analyzed the National Pension Service Investment Management's investment portfolio and asset-by-asset investment returns over the past 10 years and found that, excluding 2018 (-0.92%) when the U.S.-China trade war erupted and 2022 (-8.22%) when the Russia-Ukraine war broke out, the National Pension Service recorded 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—when it posted the worst return since the investment arm's launch—(2023–2025) reached 15%. That is unusual even compared with major global pension funds. The National Pension Service posted higher returns than Japan's Government Pension Investment Fund (GPIF) and Norway's Norges Bank Investment Management (NBIM), both global sovereign wealth funds, for two straight years in 2024–2025.
With domestic and overseas stock markets strong, the National Pension Service's first-quarter (January–March) investment return this year is also solid. The first-quarter return was 4.42%, with about 65 trillion won in investment revenue. Although overseas stocks (-0.11%) and domestic bonds (-2.03%) underperformed amid the impact of the U.S.-Iran war, domestic stocks (21.67%) led gains, along with overseas bonds (4.98%) and alternative investments (5.27%), lifting the overall return.
The marked improvement in the National Pension Service's performance is seen as driven by asset allocation changes—reducing the share of bonds, a safe asset, and increasing the shares of overseas stocks and alternative investments. As concerns grew over a tilt toward low-return assets, the National Pension Service shifted its portfolio toward stocks to boost long-term performance.
Accordingly, the target share for domestic and overseas stocks combined rose from 38% in 2019 to 55.5% in 2026, while the share for domestic and overseas bonds fell from 49.3% to 29.5% over the same period.
In particular, overseas stocks are cited as a core asset that lifted the National Pension Service's returns. Overseas stocks recorded high returns of 30.63% in 2019, 29.48% in 2021, 23.89% in 2023, and 34.32% in 2024, and delivered the best 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, at 108 trillion won in 2017, surpassed 250 trillion won in 2021, then rose to 300 trillion won in 2023, 400 trillion won in 2024, and 557 trillion won as of the end of March this year. The target share by asset started at about 20% in 2019, exceeded 30% in 2023, and expanded to about 35.9% in 2025. From 2024, it rose to the No. 1 asset by share.
Domestic bonds long accounted for a high 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 in the 1% range in 2020, and posted losses of around 5% in 2022 and 2024.
What stands out is that domestic stocks, whose allocation had been steadily declining, unusually gained prominence in the National Pension Service's investment portfolio this year. The National Pension Service had steadily reduced its allocation to domestic stocks. The allocation to domestic stocks fell from 18.0% in 2019 to 14.9% last year.
However, as the KOSPI led major global markets in gains and staged a rally, it decided to sharply increase this share. This year, the National Pension Service's target allocation to domestic stocks was adjusted to 20.8%, up 5.9 percentage points from the previous 14.9%.
The fund committee said it "considered the potential for structural changes in the domestic stock market due to the Commercial Act revision," adding that the decision was "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 was 82.44% in 2025 and 21.67% in the first quarter this year. Asset size also stayed in the 140 trillion won range through 2024, when the KOSPI moved in a long box range, but after the subsequent bull phase it surpassed 260 trillion won in 2025 and rose to 321 trillion won as of the end of March this year.
Accordingly, the allocation to overseas stocks, which had been steadily expanded, has been trimmed somewhat. The National Pension Service's target allocation to overseas stocks for this year was initially 37.2% but was lowered to 34.7%.