Foreign assets will make up half of the investment by South Korea’s National Pension Service (NPS) by 2024, increased from 30 percent last year.
The fund management committee, top decision making body of the world’s third largest pension fund, has approved the investment plan for 2020-2024, which has set the investment return target at 5.3 percent for the five-year period based on economic growth outlook and inflation forecast.
To achieve the target, NPS will keep investment in stocks at around 45 percent, in bonds at around 40 percent, in alternative products at 15 percent by the end of 2024 with a half of the investment placed overseas. It did not disclose detailed target by asset types for fair market practice and to avoid creating negative impacts in financial market.
As of the end of 2018, the overseas investment accounted for 30.1 percent with 17.7 percent invested in stocks, 4.2 percent in debts, and 8.2 percent in alternative products.
NPS plans to reorganize its overseas debt investment portfolio to have more of corporate debts, which is more lucrative than government bonds. It aims to bring up the portion of the overall investment in overseas bonds to around 10 percent within five years.
The pension fund, however, will make the shift in the investment portfolio gradually. It will maintain its investment in local stocks at 17.3 percent, in overseas stocks at 22.3 percent, in domestic bonds at 41.9 percent, in overseas bonds at 5.5 percent, and alternative products at 13.0 percent by the end of 2020.
By Chung Seul-gi and Cho Jeehyun
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