South Korean Pension NPS Rakes in Record 15% Gain in 2024

South Korea’s National Pension Service reported a record high preliminary return for the second consecutive year, ending 2024 with a 15% gain and raising its total assets under management to 1.213 quadrillion South Korean won ($830 billion).

The $110 billion investment return for the year was fueled by the pension giant’s global equities portfolio, which earned a 34.32% to raise its annualized return since the fund’s inception in 1988 to 15.17%. The NPS attributed the robust gains to the U.S. Federal Reserve’s interest rate cut and a rally among technology stocks. Global equities now accounts for approximately $300 billion of the fund’s total asset value.

Global fixed-income investments returned 17.14%, which the pension fund attributed to “robust interest income” and an increase in the U.S. dollar/Korean won exchange rate, despite an increase in a market interest rate. The alternative asset portfolio earned 17.09%. Since 1988, the asset classes have annualized returns of 5.80% and 10.48%, respectively.

Short-term funds and domestic fixed income earned 6.43% and 5.27%, respectively, for the year and 3.40% and 3.71%, respectively, since inception. According to the fund, its domestic fixed-income assets were aided by increased bond prices that led to two base rate cuts by the Bank of Korea in October 2024 and November 2024.

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Domestic equities were the only assets that did not produce a return for the year, losing 6.94% and lowering its annualized return since inception to 5.40%. The pension fund blamed the loss in 2024 on concerns over large Korean tech companies’ earnings and political uncertainty that led to the president of South Korea declaring martial law in December.

As of the end of 2024, the pension fund’s asset allocation was 35.5% global equities, 28.4% domestic fixed income, 17.1% alternative assets, 11.5% domestic equities, 7.3% global fixed income and 0.3% in short-term funds.

“Amid the challenging investment landscape in 2024, affected by concerns over economic slowdown, ongoing geopolitical risk, the U.S. presidential election, and the political turmoil in Korea, the NPS achieved a record-breaking performance for two years in a row,” NPS Chairman and CEO Kim Tae-hyun said in a statement.