S. Korea's pension fund investment pool generates highest return in 2020

South Korea’s pension fund investment pool drew their highest return on investment last year as competitive system has helped to profitability, data showed.

According to the Ministry of Economy and Finance, the pension fund investment pool managed total 27.1 trillion won ($24.3 billion) in funds last year, up 5.6 trillion won from the previous year. Return reached 1 trillion won, up 300 billion won from a year earlier.

Last year, the pool generated 3.56 percent in return rate, higher than that of the financial market benchmark of 3.15 percent.

By fund, the Housing Finance Credit Guarantee Fund delivered the highest return of 9 percent, followed by the Disabled Rehabilitation Fund (6.9 percent), the Radioactive Waste Management Fund (5.5 percent), and National Property Fund (5.5 percent).

The Housing Guarantee Fund posted the largest amount of return of 200 billion won, followed by Credit Guarantee Fund (100 billion won), and Trade Insurance Fund (100 billion won).

The finance ministry attributed record high return to its efforts to respond effectively to the market such as by expanding investments on long-term bonds according to changes in market interest rates last year. Increased competition for higher performance between fund managers under the government’s multiple competition system that was introduced in 2001 also helped bring in more return.

“Funds that focus on more mid- to long-term investments rather than short-term ones raised higher return,” it said.

Mirae Asset Global Management Co., meanwhile, will manage Korea’s pension fund pool after the government’s contract with Korea Investment Management terminates in April. Samsung Asset Management will remain as co-operator until the end of this year when its contract expires. A succeeding manager will be selected in the second half.

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