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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, South Korea — November 3, 2025 — The National Pension Service (NPS) of South Korea has, for the first time in its history, allocated more than half of its total assets to equities, marking a decisive shift from a traditionally conservative investment approach toward a more growth-oriented, risk-tolerant portfolio designed to extend the fund’s longevity.
According to NPS’s latest fund management report, the pension fund’s total assets stood at ₩1,269 trillion (approx. USD 940 billion) as of the end of June 2025.
Of that, ₩635.6 trillion — or 50.1% — was invested in domestic and overseas equities, surpassing the 50% mark for the first time since the fund’s inception.
A decade ago, at the end of 2015, the NPS held 56.6% of assets in bonds and only 32.2% in stocks. By June 2025, this balance had reversed, with equities rising above 50% and bonds falling to 33.0% of total assets.
Officials and analysts attribute the structural shift to the need for higher long-term returns amid growing fiscal pressures from Korea’s rapidly aging population and declining birth rate.
As pension payouts rise and the contributor base shrinks, the NPS has opted for a more “aggressive” strategy — accepting greater volatility to preserve fund sustainability and protect future retirees.
A notable trend is the strong tilt toward overseas equities.
Of the 50.1% stock allocation, domestic equities account for 14.9% (₩189 trillion), while overseas equities represent 35.2% (₩446 trillion) — more than twice as much.
As of the end of August, the NPS recorded an accumulated return of 8.22% for 2025, reflecting robust performance in the equity segment.
Domestic equities posted a 36.4% return, driving overall gains, while overseas equities added a solid 8.61%. In contrast, domestic bonds returned 2.85%, and foreign bonds posted a loss of 1.64%.
Performance also outpaced benchmarks across major asset classes.
Domestic equities returned 36.68%, exceeding the benchmark by 1.22 percentage points, while overseas equities and domestic bonds outperformed their benchmarks by 0.30 and 0.12 points, respectively. Even foreign bonds, though negative, limited losses to –1.75%, outperforming the benchmark decline of –2.14%.
Analysts note that this asymmetric return structure, led by domestic equities and supported by global holdings, has been key to sustaining the NPS’s investment performance in 2025.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
