Korea’s NPS to boost alternative investments in search of higher returns

The logo of the National Pension Service (NPS) is seen at its branch office in Seoul, South Korea, November 4, 2016. REUTERS/Kim Hong-Ji/File Photo

South Korea’s National Pension Service (NPS) has said it will ramp up its activity on alternative assets to improve investment returns after a weak 2018.

“The National Pension Service will concentrate more on enhancing the rate of return so as to increase the sustainability of the fund,” the Ministry of Health and Welfare said in a statement.

The ministry added that even as alternative investments have proven to be superior to traditional assets in terms of profitability and risk, the actual execution has been less than the investment target due to operational and market conditions.

The $570-billion pension system now aims to streamline the decision-making process for making alternative investments, which will see the time required to make investment decisions shortened by half to four weeks. In addition, it also plans to invest in a single hedge fund to build its own portfolio and select entrustment entities to secure better management capability, instead of the re-delegation fund-of-funds approach.

NPS is the world’s third-largest pension fund with 667 trillion won ($570 billion) in assets under management as of February 2019. It expects the value to reach 1.78 quadrillion won by 2041.

The fund’s alternative investments accounted for 11.6 per cent of the total as at the end of February and are projected to be 12.7 per cent in 2019 and 15 per cent by 2023.

NPS recorded an accumulated annualised return of 5.1 per cent since its inception in 1988. Last year’s return hit a negative 0.92 per cent before reviving to 3.9 per cent in the first two months of this year.

The fund has reportedly allocated 600 billion won ($511 million) and 400 billion won ($341 million), respectively, to management-oriented private equity funds and special situation and distressed asset funds. It was also said to set aside 1 trillion won for investments in corporate partnership funds, which it jointly operates with conglomerates.

NPS was recently reported to back SoftBank’s planned $500 million global acceleration fund. Meanwhile, its domestic and global equity portfolio includes biggies such as Samsung, Naver, Hyundai Motor, KB Financial Group, as well as global tech majors Alphabet, Apple, Facebook, Microsoft and Tencent.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.