NPS posts 7% investment loss in Q1-Q3 as equities, bonds plunge

National Pension Service (NPS) of South Korea said Tuesday it saw a cumulative loss of 7.1% on investment, or 68 trillion won ($51.3 billion), between January and September of this year.

The assets under management (AUM) of the world’s third-largest pension fund had dropped to 896.6 trillion won as of end-September, according to its preliminary report.

The pension scheme’s alternative assets, making up 16.8% of the AUM, achieved a 16.2% return on investment. Overseas equities, accounting for 27.6%, and overseas bonds, making up 7.8%, respectively had negative 9.5% and positive 6% in profits during the first nine months.

Domestic equity, 13.6% of the AUM, and local bonds, 33.8%, respectively posted 25.5% and 7.5% losses on investment in the same period.

The return on alternative investment is highly likely to be adjusted at the end of this year, reflecting fair value. The 16.2% return reflects interest, dividend income and currency translation gains thanks to the strong US dollar versus the Korea won.

The investment losses came as global equity and bond have plunged since early this year, the pension fund said. The losses increased with concerns over inflation, the prolonged Russia-Ukraine war and global supply chain disruptions, it added.

From January to June of this year, the pension fund posted its worst-ever half-year loss, a negative 8% return or 77 trillion won. The cumulative loss shrunk to the 4% range in August, but increased in September again.

“The loss resulted from the increased market volatility driven by the US' rising Consumer Price Index (CPI), concerns over Europe’s energy crisis and growing worries over the UK economy,” NPS stated.

Some global pension funds also had losses on investment during the first three quarters. Dutch pension scheme ABP and the US-based California Public Employees’ Retirement System (CalPERS) respectively posted 16.6% and 15.9% losses, according to NPS' strategic research team analysis.

The world’s largest and second-largest pension funds, Japan’s Government Pension Investment Fund (GPIF) and the Norwegian Government Pension Fund Global (GPFG), posted 3.8% and 18.2% losses, respectively. The Canada Pension Plan Investment Board (CPPIB) had a negative 6.8% return.

Write to Jun-Ho Cha at chacha@hankyung.com
Jihyun Kim edited this article.