South Korea's National Pension Service, Seoul, plans to increase investments in equities and alternatives in 2013, while reducing fixed income.
The nation's biggest investor will increase the weighting of domestic stocks in its holdings to 20% of assets in 2013, the Ministry of Health and Welfare, which oversees the pension fund, said in an e-mailed statement Thursday. That compares with its 2012 target of 19.3%.
The National Pension Service also plans to have 9.3% of assets in overseas equities next year, up from the current 8.1% target, while its weighting of alternative investments will rise to 10.6%, from 9.2%.
The pension fund aims to pare its domestic bond weighting to 56.1% in 2013, from 59.3%, an overseas bonds will be 4%, a dip from 4.1% in 2012.
The pension fund, which had about $300 billion in assets at the end of March, is boosting investments in equities even as investors favored less risky assets at a time of increasing concerns over Europe and the strength of the global economy. An index of South Korean government bonds compiled by HSBC Holdings returned 2.59% this year through June 13, outpacing a 1.8% gain in the benchmark Kospi stock index.
“The higher weighting in stocks is, of course, positive given that the fund's investment is serving as a good support to the market amid ongoing volatility in financial markets stemming from Europe,” said Kim Jae Dong, head of equities at SEI Asset Korea, which manages about $5.3 billion in assets. “Compared with other overseas pensions, NPS' stock weighting is still low, and I think it's taking a right approach to continue diversifying its assets.”