Private School Pension Fund Records 11%+ Returns for 3 Consecutive Years

- In 2021, an all-time high return of 11.95%, especially achieving 15.2%p above the benchmark (BM) in alternative investment assets

- Overseas alternative investments recorded the highest return of 34.26%, exceeding BM by 19.55%

[Asia Economy Reporter Park So-yeon] The Private School Teachers' Pension Fund announced on the 4th that the fund management return rate for 2021 was 11.95%, achieving an 11% return rate for three consecutive years and a remarkable operating profit exceeding 2 trillion KRW for two consecutive years, marking the best performance.

Last year, thanks to the boom in overseas stock markets centered on developed countries and the fair value increase of alternative investment assets, the return rate exceeded the benchmark (BM) by 2.46 percentage points (p), recording the highest return rate of 11.95% in 10 years. In particular, the operating profit reached 2.4738 trillion KRW, the highest since its establishment.

Among asset classes, the performance of overseas alternatives and overseas stocks stood out, supported by asset price increases and exchange rate effects due to currency revaluation. The return rate of overseas alternatives was 34.26%, exceeding the BM (14.71%) by 19.55%p, and overseas stocks achieved a high return of 27.12%. Domestic alternatives also showed a strong performance of 15.77%, supported by portfolio diversification and rising real estate prices, considering the deterioration of the real economy and the low interest rate environment.

In addition, the corporate finance sector reflected improved performance of invested companies and the favorable overseas stock market. Although the overseas real asset sector struggled with the shock to the real market due to COVID-19, the strong returns from Value Added and Opportunistic strategies and the stability of Core strategies contributed to the alternative investment returns.

In domestic stocks, the Passive management strategy achieved a direct management return of 4.11%, exceeding the BM by 53 basis points (bp) (1bp=0.01%). Through asset allocation between direct and entrusted management, domestic stocks achieved a 5.7% return, exceeding the BM by 78bp. Overseas bonds also recorded a relatively favorable return of 7.88%. However, domestic bonds showed a poor performance of -1.16% due to rising interest rates.

The fund management profit was 2.4738 trillion KRW, following the high performance of 2.1411 trillion KRW in 2020. Thanks to these fund management results, the size of the Private School Teachers' Pension Fund, which was 20.9128 trillion KRW at the end of 2020, increased by 2.5805 trillion KRW to 23.4933 trillion KRW.

In particular, according to the financial projection implemented in 2020, the fund depletion was projected to occur in 2049. However, reflecting three consecutive years of double-digit fund management returns, the depletion point is extended by three years to 2052.

A representative of the Private School Teachers' Pension Fund stated, "The three consecutive years of double-digit returns are the result of adhering to the previously established mid- to long-term asset management strategy while actively responding to changes in financial market conditions and management environments." He added, "We will also strive to diversify investments by continuously expanding the proportion of overseas and alternative investments."

Meanwhile, as of the end of last year, the total asset size of the Private School Teachers' Pension Fund was 26.6769 trillion KRW, an 11.6% increase (2.7731 trillion KRW) compared to 23.9038 trillion KRW in 2020. Of the total assets, 23.4933 trillion KRW, or 88.1%, is managed as investment assets.

The asset allocation by class is ▲Stocks 42.49% (9.9828 trillion KRW) ▲Bonds 34.75% (8.1629 trillion KRW) ▲Alternatives 21.28% (4.9988 trillion KRW) ▲Cash equivalents 1.48% (348.8 billion KRW).

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