State pension fund plans to diversify investments

Korea’s state pension fund will diversify its investment portfolio this year in an effort to boost returns, its operator said Thursday.

The National Pension Service (NPS) said it will invest more in overseas securities and alternatives while cutting back on bond investments.

Under the plan, the portion of investments in overseas stocks and bonds will be raised to 32.1 percent and the comparable figure for alternative investment vehicles to 12.7 percent. The fund’s investments in domestic bonds will be reduced to 45.3 percent.

The NPS said this year’s invest- ment plan is designed to spread risks through diversification and generate better yields. The diversification plan comes as the state pension fund posted poor returns last year amid a litany of negatives at home and abroad.

As of the end of October last year, its return stood at minus 0.57 percent, marking the first negative yield in 10 years.

In particular, the pension fund logged a negative return of about 17 percent on its investments in domestic stocks as the local equity market was hit hard by a trade war between the United States and China, rate hikes in advanced economies and other negative factors.

The country’s welfare minister, who oversees the NPS, said Wednesday that top priority will be placed on raising the fund’s investment returns.

“As a long-term investor, the state pension fund should will focus on hiking long-term investment returns and will keep up efforts to diversify investments and manage short-term risks,” Health and Welfare Minister Park Neung-hoo told a meeting of the fund’s investment management office.