SEOUL, July 19 (Yonhap) — South Korea’s national pension fund plans to make its first investment in overseas hedge funds next year as part of efforts to secure stable returns, an internal document from the fund showed Sunday.
According to the 2016 asset allocation plan obtained by Yonhap News Agency, the National Pension Service (NPS) will invest 1 trillion won (US$870 million) in overseas hedge funds in 2016 out of its overall idle funds valued at 86.5 trillion won.
As of end-2016, the state pension manager’s investment in overseas hedge funds is expected to account for 0.2 percent of its total assets worth 567 trillion won.
The NPS, one of the world’s four largest pension fund operators, said it plans to entrust the investment money with a fund of hedge funds, or an investment vehicle whose portfolio consists of shares in a number of hedge funds, instead of putting the money directly into hedge funds.
An NPS official said the purpose of investment in hedge funds is to secure stable returns by putting funds into products that yield higher returns than stocks and bonds.