SOUTH KOREA - South Korea's US$202bn National Pension Fund is to commission foreign asset managers to increase its domestic and overseas equity allocation, as bonds fall out of favour.
Following a fall in yield of nearly 50% in three-year government bonds, the country’s largest institutional investor has decided to reallocate some of its 78.1% holding in the asset class. In contrast, the Kopsi index rose 41% in the same period.
Daehan Investment Trust Management’s Lee Chun Soo, who manages $3.7bn of the fund, said: “These plans could encourage other pension funds in the country to change their conservative investment styles.”
The fund would up its local equity investments from 10.9% to 13.6% and overseas equities from 0.7% to 2.8%.
The fund is expected to grow 16% to KRW220trn (US$233bn), but minister for health and welfare Rhyu Si Min did not identify where the fund’s investments would be heading.
“We’re too big to fit into local markets; we have to turn our attention overseas,” he said. “We’re still a small fish that isn’t used to life in the big ocean. We must learn by watching others.”
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