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Korea pension fund to expand portfolio

Minister Chin says that fund will also seek long-term partnership with companies


The investment of the 340-trillion-won ($300 billion) national pension fund will be diversified into emerging markets, green industries and overseas bonds over the next three years, Health and Welfare Minister Chin Soo-hee announced Friday.

Overseas investment will rise to 20 percent of the total from the current 12.6 percent and the first branch will be established in New York in July, she told CEOs of world-class financial services firms at an investor relations meeting held in New York.

Chin’s meeting with the financial leaders came as the world’s fourth-largest pension fund announced its portfolio reform by 2014, shifting from heavily focused domestic fixed-income to dynamic and promising overseas profit.

Wall Street big names, which control New York Stock Exchange and NASDAQ are expected to join the management of the fund, which is expected to reach 2,465 trillion won in 2043 to be the largest in the world.

Bond investments will be split into credit and mortgage bonds rather than government bonds. Emerging markets and the so-called green industry such as renewable energy and natural resources development will replace the conventionally preferred developed nations’ already saturated industries as investment items. A special risk management manual will be adopted to minimize possible damage from fluctuating global finances.

The bold moves are backed by a promising report: the National Pension Service, operator the fund, said it has marked a 10.2 percent return on investment last year on the back of the global recovery, which is higher than many other giant pension funds.

The NPS owns several pieces of overseas real estate including the Sony Center in Berlin; HSBC headquarters building in Canary Wharf of London, KDX Toyosu Grandsquare in Tokyo, and Aurora Place in Sydney, raking in billions of won in rent every year. It also owns Colonial Pipeline Co., among others.

The new plans are expected to create aggressive yet safer investment model for the next generation, the government said.

“We are looking for a long-term partnerships with firms which can share their abundant experiences and provide us with investment information and vitality for our new projects,” Chin said.

Meanwhile, during her one-week trip to the U.S., the minister worked on marrying Korean health technology with developed nations’ firms.

The Ministry signed a 210 billion won-memorandum of understanding with American pharmaceutical company Merck on research and development as well as personnel exchange programs. She also exchanged a 170 billion won-letter of intent with Prodea System over its possible investment in Korean firms.

“I hope the Korean people will be inspired by Americans’ endless innovation. Korean technology combined with American experience will enable Korean firms to pierce into the U.S. market and top the world market eventually,” Chin said.

By Bae Ji-sook (baejisook@heraldcorp.com)
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