Korea’s National Pension Service (NPS) earned 9.18% return on its investments in the first nine months of 2024, mainly driven by gains in foreign stocks.
The return was up from 8.66% in the same period a year ago.
“The gain was largely driven by the stellar performance of its global equity, especially US technology stocks, amid high expectations for the US Federal Reserve’s rate cuts to bolster the economy,” the pension fund giant says in a statement on November 29.
Its foreign equity holdings posted a return of 21.35%, foreign bonds earned 6.97%, alternatives, 5.05%, and domestic bonds, 4.09%.
The NPS’ Korean equity holdings were the worst performer, with a return of just 0.46%.
According to a fund manager at a US asset management firm in Hong Kong, this was largely due to poor corporate governance of the pension fund’s large investee companies,
“Shares of Korean companies generally trade at lower valuations than their peers overseas, mainly due to poor governance,” he tells Asia Asset Management, speaking on condition of anonymity.
The Korean government introduced a so-called corporate value-up programme earlier this year aimed at improving corporate governance.
Launched in February 2024, the programme seeks to encourage higher corporate standards and help unlock value. The fund manager says it remains to be seen if the scheme will be successful.
The NPS, the world’s third largest pension fund, has earned 675.2 trillion won (US$507.8 billion) from investments since it was formed in 1988, boosting its total assets under management to 1,146 trillion won as of end-September.