National Pension Service Reports 6.49% Return by End of November Last Year... "Thanks to Stock Market Boom"

[Asia Economy Reporter Park So-yeon] The National Pension Service's rate of return at the end of November last year rose to nearly 6.5%, driven by a boom in the domestic stock market.

The National Pension Service Fund Management Headquarters announced on the 29th that the rate of return on the National Pension Fund as of the end of November last year was tentatively calculated at 6.49%. This is an increase of 4.43 percentage points compared to the rate of return of 2.06% at the end of October, one month earlier.

The average annual cumulative rate of return since the establishment of the National Pension Fund was 5.93%. The cumulative profit totaled KRW 415.6 trillion, showing a stable rate of return.

By asset class, the weighted rate of return by amount was recorded as domestic stocks 20.39%, foreign stocks 8.36%, domestic bonds 1.92%, alternative investments 0.65%, and foreign bonds -0.34%, in that order.

Domestic and international stock markets showed high volatility early in the year due to COVID-19, but showed strength due to expectations of economic normalization following vaccine development news and the resolution of uncertainty in the US presidential election. The KRW-USD exchange rate fell by 4.61% compared to the end of the previous year.

The domestic KOSPI index rose 17.91% from the beginning of the previous year to the end of November, while the global stock market (MSCI ACWI ex-Korea, dollar basis) increased by 11.86% during the same period.

Domestic stocks saw an increase in returns due to expectations of future performance improvements in major industries and growing possibilities of overcoming COVID-19. Foreign stocks also saw returns rise due to COVID-19 vaccine development and the resolution of uncertainty following the US presidential election.

Domestic and foreign bonds saw an increase in valuation gains as interest rates fell amid expectations that major countries' expansionary fiscal and monetary policies would continue. However, the decline in the exchange rate limited the rise in bond returns due to decreased foreign currency translation gains.

The 3-year Korean Treasury bond yield fell by 37.5 basis points (1bp=0.01 percentage points) from the beginning of last year to November. During the same period, the 10-year US Treasury bond yield dropped by 106.8 basis points.

Meanwhile, the returns on domestic and foreign alternative investment assets are mostly determined by interest and dividend income or foreign currency translation gains and losses due to exchange rate fluctuations. Fair value evaluation is conducted once a year at the end of the year, so the annual rate of return does not reflect the fair value evaluation amount.

This content was produced with the assistance of AI translation services.