By Chung Ah-young
The state-run National Pension Service (NPS) will expand its overseas investment to diversify its investment portfolio and boost returns, the government said Wednesday.
The plan is part of stimulus measures announced by Strategy and Finance Minister Choi Kyung-hwan amid the slow economic recovery.
The ministry said that it will come up with comprehensive measures to increase investments in overseas assets by the end of the year.
The NPS, the world's fourth-largest pension operator, holds assets worth 427 trillion won as of 2013, but struggles with finding investments in the domestic market for higher returns.
As of May this year, its overseas investment took up 19.4 percent or 89 trillion won of its total assets. Of that, local stocks accounted for 55 percent or 48.7 trillion won, alternative investments represented 24 percent or 21.4 trillion won, while bonds were 21 percent or 18.8 trillion won.
The NPS is the nation’s largest institutional investor with its local stock holdings accounting for 6.4 percent of the domestic stock market and its bond holding 14 percent.
“In recent years, the amount of the NPS’s pension funds has dramatically soared. To reduce the risks on the nation’s economy and secure stable profits, the NPS should seek opportunities abroad,” the ministry said in a statement.
“The detailed plan will include the diversification of investments in overseas stocks and alternative investments, along with risk management measures,” it said.
Also, an investment pool of public funds, which was designed for market stability and long-term investments, will be allowed to invest in the overseas market. The investment pool deposited from 54 pension funds amounts to 14.2 trillion won as of June.
The government said that it will revise the law to allow them to expand overseas investments. Under the current law, the pool has only invested in the local properties because of no legal grounds concerning overseas investment.
“We are considering revising the law to allow the pension fund pool to be invested in diverse products such as overseas stocks, bonds and alternative investments,” the ministry said.