SK Pension Fund Cuts Back on Stocks

December 29, 2008 ( - In the wake of the recent market turmoil, South Korea's National Pension Service will cut back on its allocation to equities.

The NPS,South Korea’s largest institutional investor, is now aiming to invest just 20.6% of its assets in equity markets, down from the previous target of 29.7%, the Ministry for Health, Welfare and Family Affairs said in a statement.    The NPS lowered its domestic stock investment target to 17% of its assets (from the previous target of 20.3%), and reduced its planned investment in overseas stocks to 3.6% from the previous 9.4% target, according to Reuters.  

“The fund had to revise its 2009 investment plan as instability in global markets is expected to persist,” National Pension, set up in 1988 and now covering private sector employees and those who are self-employed, said in the statement, according to the Bloomberg report. “We also needed to respond flexibly to unstable market conditions both at home and overseas.”

Alternatives Up

Alternative investments, such as private equity, infrastructure, and real estate, are projected to make up 6% of the fund’s investment portfolio at year-end 2009, higher than the fund’s original target of 3.9%, it said.

The NPS plans to boost purchases of local bonds, lifting its total bond investment target next year to 73.4% of its assets from the previous 66.4%.   According to the AFP, the pension fund had been planning to increase its stock holdings to 40% of the total by 2012 until the global financial turmoil intensified in mid-September.

The fund expects assets to rise to 256 trillion won by the end of next year, from 225 trillion won ($178 billion) at present, according to Bloomberg.