(June 15, 2012) — China’s National Social Security Fund (NSSF) returned just 0.84% in 2011, its lowest return since 2008 and a stunning drop from its average return of 8.4%, according to the fund’s newly released annual report.
The report pegged the fund’s value at roughly $137.7 billion, and claimed that it had earned a mere $1.16 billion in 2011 on its investments. That represents a slide from its 2010 return of 4.2% and a far cry from its average return on investment of 8.4% since the fund’s inception in 2000.
The NSSF, China’s largest pension fund, recently announced that it would increase its allocation to domestic private equity by 50%, raising its current investment of $3 billion to $4.71 billion by the end of the year. NSSF Chairman Dai Xianglong also pledged to allocate $7.8 billion to the asset class by 2015, suggesting a longer-term shift in favor of domestic private equity investments.
“While the securities market is volatile, the primary market is full of investment opportunities for us to seek and seize,” Wang Zhongmin, the Vice President of the NSSF, told state media in March.
Although widely interpreted in part as an effort by the Chinese government to shore up its economy, in light of the new annual report the NSSF’s move toward domestic private equity may also simply reflect a desire to increase returns, as almost 70% of the fund’s meager 2011 returns came from its private equity investments.