Korea’s National Pension Fund Rebounds With 13.6% Return in 2023, Grows to $780B

South Korea’s National Pension Fund rebounded from 2022’s 8.2% investment loss with a 13.6% return in 2023, buoyed by strong returns from global and domestic equities, as its asset value rose to approximately 1,036 trillion won ($780 billion) from 889.9 trillion won a year earlier. [Source]

Global equity was the top-performing asset class for the pension giant, returning 23.89%, followed by domestic equity, which returned 22.12%. The equities’ performance was a sharp turnaround from 2022, when domestic equities weighed down the portfolio with a 22.8% loss and global equities dropped more than 12%.

Global and domestic fixed-income investments gained 8.84% and 7.40%, respectively, compared with losses of 4.9% and 5.6%, respectively, the previous year. The investment portfolio’s alternative investments earned 5.8%, down from a nearly 9% gain in 2022, while short-term assets returned 4.23%, compared with a loss of almost 1% the year before.

The pension fund also reported a three-year annualized gain of 5.04% and a 5.9% gain since its inception in 1988.

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As of the end of 2023, the pension fund’s asset allocation was 31.5% domestic fixed income, 30.9% global equity, 15.9% alternatives, 14.3% domestic equity, 7.1% global fixed income, 0.2% short-term assets and 0.1% welfare sector and other.

Every year, the National Pension Service’s Fund Management Committee, which manages the pension giant, sets mid-term asset allocation targets with a five-year time horizon. For 2024, its target asset allocation is 33.0% global equity, 29.4% domestic fixed income, 15.4% domestic equity, 13.8% alternatives and 8.0% global fixed income.

By 2028, it is aiming to boost its asset allocation in global and domestic equities to approximately 55% combined from its current 45.2%; cut its combined allocation to domestic and global fixed income to approximately 30% from 37.4%; and trim its allocation to alternatives to approximately 15%.