As for other new investment opportunities such as hedge funds, timber, wheat cultivation projects and the like, the pension service will review next year in earnest. (image credit: Kobizmedia/ Korea Bizwire)
SEOUL, Dec 14 (Korea Bizwire) – The National Pension Service will bring up the share of overseas investment in total to 25 percent from the current level of 20 percent within five years from now.
It will also come up with a more structured foreign currency risk management scheme including setting of appropriate forex hedge ratios in relation to total investment volume. As for other new investment opportunities such as hedge funds, timber, wheat cultivation projects and the like, the pension service will review next year in earnest.
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The Ministry of Health and Welfare held on December 12 an annual meeting on National Pension Fund investment strategies at the Plaza Hotel Seoul and discussed overseas investment strategies, risk management systems, and infrastructure in preparation for the era of national pension fund in excess of 500 trillion won.
The pension fund’s investment accounts for 6.4 percent of the nation’s total stock market capitalization and 13.7 percent of outstanding bonds balance as of the end of last year.
The National Pension Fund Investment Office said it would increase the share of overseas investment to 25 percent by 2019 from 20 percent now. It is likely the investment volume will rise to 200 trillion won from 90 trillion won as of June this year, given the fund size will increase to 800 trillion won from 450 trillion won during the same period.
Earlier in March this year, the health ministry and the investment office formed a task force to plan for future overseas investment strategies consisting of private-sector experts. The investment office will also prepare for comprehensive risk management guidelines by compiling risk management principles for a wide variety of investment instruments into a single volume.
It will also set up a computerized risk management system to deal with investment risks in a more organized manner while strengthening its research function.
By Sean Chung (schung10@koreabizwire.com)
