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Korea’s NPS to raise foreign equity allocation to 35% by 2025

By Asia Asset Management  
May 22, 2020

South Korea’s National Pension Service (NPS), the world’s third largest pension fund, plans to raise its foreign equity allocation to 35% and cut exposure to domestic stocks to 15% by 2025 as it seeks stable returns on investments.

Welfare Minister Park Neung-hoo, who heads the NPS’s investment management committee, told reporters about the investment plan at the pension fund’s annual committee meeting on May 20.

He says NPS will have to pursue stable returns on its investments, and that the long-term macroeconomic view remains unpredictable even though financial markets are stabilising after being battered by the coronavirus crisis.

A spokesperson for the NPS confirmed the remarks, which were reported in Seoul-based English language daily The Korea Herald on May 21.

As of February 2020, the NPS allocated 22% of its 737.5 trillion won (US$599 billion) total assets to foreign equities, and around 20% to Korean stocks. Mr. Park says the foreign share will first be raised to 25% next year.

The spokesperson says this doesn’t mean the pension fund will offload Korean stocks in the wake of the coronavirus crisis.

“One thing you need to know is that the size of NPS’s total assets increases every year. As such, the value of its domestic equity portfolios will continue to increase even if the portion of the investment decreases,” he tells Asia Asset Management.