National Pension Service Chair Kim Sung-ju said on the 23rd that the fund will decide whether to maintain, lower, or further raise the share of domestic stock investments after watching market trends. Late last month, the National Pension Service Fund Management Committee (the committee) raised this year's year-end target allocation for domestic stocks to 20.8% from 14.9%. It is estimated that the allocation is now almost at the target.
At an online press briefing the same day, Kim said the decision to raise the share of domestic stock investments was made because the change in the domestic market was seen not as a temporary market factor but as a structural shift showing that the fundamentals of the Korea stock market had improved.
Considering the allowance ranges for strategic asset allocation (SAA), which recognizes an overweight to a certain limit even if the domestic stock holding share exceeds the target, and tactical asset allocation (TAA), the National Pension Service can operate flexibly by up to ±8%. As of February, the National Pension Service's domestic stock share was 24.5%. Given that the KOSPI index, which was 5,000–6,000 points (p) in February, is 8,000–9,000p this month, it is estimated that the share of domestic stocks at the National Pension Service has further increased due to rising stock prices.
Kim said a decision will be made at the end of the year on what to do with the domestic stock market share. Kim also said the committee decided in May to revert to cutting the domestic stock share by 0.5 percentage point each year starting next year.
The National Pension Service temporarily ended domestic stock rebalancing in January but will resume it starting next month. This has raised concerns that a large volume of stocks held by the National Pension Service could hit the market and drag down prices. On this, Kim said that while a private player focused solely on making money might unload large volumes or buy on the cheap, the National Pension Service acts with great caution. Kim also said there is a principle of public interest to minimize market shock.
On fund-type retirement pensions, Kim said the 501 trillion won retirement pension market delivered returns in the 3% range over the past five years, while fees reached 2 trillion won. Kim added that with 1,800 trillion won under management, the National Pension Service incurs only about 3 trillion won in labor expense and achieves superior returns, so its participation would likely better support the public's old-age security.
Kim added that the National Pension Service is the institution that best executed diversification, asset allocation, and risk management, and will play the role of a catfish that spurs competition with private operators.