Korea’s National Pension Service will invest more than US$40 billion in overseas equities and bonds over the next five years amid its sluggish gains in the domestic market, Financial Times of London said Tuesday.
The mammoth pension fund, the largest investor in Korea at KRW 489 trillion (US$438 billion) and owning 8.8 percent of all equities in the country, is scheduled to raise its offshore asset profile from 20 percent to 30 percent given low interest rates and weak growth in Korea, according to MandateWire.
A Korean media report said the pension fund will raise its overseas equity exposure from 16 percent to 20 percent by 2020, while reducing that of domestic equity to 18 percent from 20 percent.
The NPS saw gains of just 5.5 percent from its domestic equity portfolio last year, a far cry from that of its overseas equities of 9.4 percent. The gap between the two has been even bigger since 2012, with foreign equities earning 13 percent and domestic equities just 1.8 percent over the three-year period.
The report said the pension agency is expected to mostly invest in the U.S. and Europe rather than the Asia-Pacific region, with North America accounting for 50.3 percent of the fund’s overseas equity portfolio and Europe 28.4 percent.