NPS inks over $20 bn in overseas alternative investments via partnerships

The National Pension Service (NPS) signed new contracts worth around 23 trillion won ($20.1 billion) abroad in alternative investments last year, despite limitations in fresh deal sourcing amid the global pandemic, which imposed travel restrictions between countries.

The South Korean pension fund's strong performance is largely owing to boosted strategic partnerships with major overseas institutional investors, such as Dutch pension fund manager APG and Germany’s Allianz SE, and co-investing in alternative assets.

The NPS concentrated on deal sourcing and diversifying its strategies and investment regions.

Foreign exchange loss was reflected in the pension fund's overseas alternative investments, resulting in a lower return compared to other years. But stable interest income and dividend yields, alongside increased value in holdings,  contributed to the pension fund’s overall returns.

Meanwhile, the NPS reported a provisional return rate of 9.7 percent in 2020, marking the second time for the South Korean pension fund to log near 10% returns two years in a row. The first was in 2009 and 2010, when it posted 10.4% returns for two straight years.

The NPS achieved its strongest investment return of 11.31% in 2019, led by hefty gains from equities and overseas fixed-income securities, while gains from alternatives slowed to a single-digit rate.

As of the end of last year, the world's third-largest pension fund's gains reached around 72.1 trillion won. Its net assets stood at 833.7 trillion won, up by 97.7 trillion won from the year-earlier period.


Write to Jung-hwan Hwang at jung@hankyung.com
Danbee Lee edited this article.