Private School Pension Fund Surpasses 2 Trillion Won in Investment Returns for the First Time

[Asia Economy Reporter Park Soyeon] The Private School Teachers' Pension Service announced on the 9th that the fund management yield recorded 11.49% last year, achieving operating profits exceeding 2 trillion won for the first time.

Following a fund management yield of 11.15% in 2019, the Private School Teachers' Pension Service recorded a fund management yield of 11.49% in the second half of 2020, surpassing the benchmark (BM) yield by 1.19 percentage points (p) due to the stock market boom. Operating profits amounted to 2.141 trillion won, marking the highest level since its establishment.

Thanks to these fund management results, the fund size of the Private School Teachers' Pension Service, which was 20.746 trillion won at the end of 2019, increased by a total of 2.4916 trillion won to 23.2376 trillion won at the end of 2020.

Although the Private School Teachers' Pension Service experienced temporary losses in fund management amid the stock market crash in the first quarter of last year due to the COVID-19 pandemic, it implemented a strategy to expand the stock ratio based on cash holdings and liquidity according to mid- to long-term asset allocation principles.

Subsequently, as global policy coordination among countries led to a V-shaped rebound in the stock market, the fund management yield showed a rapid recovery, and from the second half of the year, the Private School Teachers' Pension Service recovered to a level that generated excess returns compared to the BM through a continuous stock ratio expansion strategy.

The Service analyzed that this was the result of faithful adherence to mid- to long-term strategic asset allocation, reflecting the reduction of bond ratios?safe assets with low growth and low interest rates?and the expansion of risky assets such as stocks and alternatives.

Among financial asset classes, stocks showed outstanding performance. Domestic stocks achieved a yield of 34.43%, and overseas stocks achieved 13.89%, resulting in a high final stock sector yield of 24.10%, exceeding the BM yield by 0.88 percentage points.

Additionally, domestic alternatives achieved a yield of 12.48%, exceeding the BM by 7.65 percentage points. However, overseas bonds and overseas alternatives recorded poor management performance due to the weak dollar.

On the other hand, overseas alternative investments, which were expected to gradually increase in proportion, faced difficulties in active new investment expansion due to challenges such as on-site inspections caused by the COVID-19 pandemic.

Therefore, the Service promoted the selection of domestic PEF and VC management companies, and overseas alternative investments shifted to investing mostly through blind funds by contributing to existing committed funds and some additional commitment agreements.

A representative of the Private School Teachers' Pension Service said, "This year, to achieve stable fund management goals, we will adhere to the mid- to long-term asset management strategy previously established while actively responding to changes in financial market conditions and management environments," adding, "We will also strive to diversify investments by continuously expanding the proportion of overseas and alternative investments."

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