National Pension Fund Posts -8% Return in First Half... Reserves Reach 882.7 Trillion Won (Update)

[Asia Economy Reporter Park Soyeon]The National Pension Service Fund Management Headquarters announced on the 29th that as of the first half of 2022, the National Pension Fund reserves were tentatively estimated at 882.7 trillion won, showing a -8.00% rate of return during this period.

However, as of August 25, the stock market volatility has decreased, the bond market's interest rate rise has slowed, stabilizing compared to the second quarter, and the National Pension's rate of return has recovered to approximately -4% (tentative).

The asset-specific rates of return for the first half of this year (based on amount-weighted returns) were recorded as domestic stocks -19.58%, foreign stocks -12.59%, domestic bonds -5.80%, foreign bonds -1.55%, and alternative investments 7.25%.

The negative performance of fund management returns up to the second quarter this year was due to the expanded losses caused by the simultaneous downturn in global stocks and bonds.

This is the first time since the 1970s stagflation (economic stagnation accompanied by inflation) that both stocks and bonds have recorded significant losses.

The economic deterioration is attributed to widespread inflation prompting the U.S. Federal Reserve (Fed) to aggressively tighten monetary policy, prolonged Russia-Ukraine war causing commodity price increases and supply chain issues, which heightened inflation concerns.

Rising interest rates due to monetary policy caution and inflation concerns have worsened investment sentiment among global financial market participants, affecting the returns on stocks and bonds held by the fund.

Exchange gains from the strong dollar partially offset the decline in returns on overseas assets held by the National Pension Fund.

Amid the global stock market plunge, which caused declines in operating returns of major overseas pension funds, the National Pension's performance was relatively favorable among major pension funds that disclosed their second-quarter results this year.

A National Pension Service official stated, "We will focus on risk management amid increased volatility in global financial markets," and added, "We are striving to secure investment opportunities to enhance performance during the economic recovery period."

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