SOUTH KOREA - Morgan Stanley and Credit Suisse have been reportedly named as the National Pension Scheme's (NPS) partners as it aims to diversify its overseas investment portfolio and boost returns.
A national newswire said the KRW189trn (US$200bn) NPS would use the investment companies to invest $2bn in overseas equities and bonds.
According to the latest figures, the partnership would mean a massive increase in allocation to overseas equities, from 0.2% of the NPS portfolio in 2003, to the targeted 2.8% in 2007.
The 2006 return on overseas equities was stated to be 19.11%, up from 10.76% in 2005 and 16.16% in 2004.
The NPS is also thought to be considering the appointment of an alternative asset manager. This is because its targeted allocation in this class has grown from 0.2% in 2003 to a targeted 2.1%.
The NPS has said overseas investment should seek to enhance the portfolio diversification effect by achieving either higher returns at the same level of risk, or the same rate of return at a lower level of risk.
Kim Sang Jo, the minister in charge of South Korean pensions, recently said the NPS could help local companies fight off overseas takeover bids for domestic firms by buying shares in companies being considered by foreign companies.
Spokespeople from Credit Suisse or Morgan Stanley were not available for comment when contacted by Global Pensions.
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