NPS's 27% Return Under the Microscope: Stocks and Bonds Move in Opposite Directions [fn Market Watch]

[Financial News]  NPS posted a fund management return of more than 27% in the first half of this year, lifting its assets to 1,866 trillion won. The key factor was not just the double-digit return, but the exceptional performance of domestic stocks, which rose by more than 100% and pushed up the overall portfolio return.
According to NPS Fund Management Headquarters on the 28th, the fund's return as of the end of June was provisionally estimated at 27.22% on a money-weighted basis.
The biggest contributor to the strong performance was domestic stocks, which returned 107.37%.
During the same period, the domestic stock market rose 101.14% from the end of last year. Corporate earnings improved, especially in semiconductors, and uncertainty surrounding the Middle East war eased, helping the market benefit from the strong rally.
Overseas stocks also helped, with a return of 17.81%. As the Artificial Intelligence (AI) investment cycle continued and earnings from global tech companies held up, equity assets effectively drove NPS's overall performance in the first half. Global stock markets rose 8.99% over the same period.
Bonds, however, showed mixed results. Domestic bonds returned -3.00%, the only major asset class to post a negative return. The decline reflected a rise in the 3-year Korean Treasury bond yield of 74.6 basis points from the end of last year, which reduced bond valuations.
Overseas bonds returned 9.22%, supported by valuation effects from the rising won–dollar exchange rate, even though the 10-year U.S. Treasury yield rose 20.7 basis points over the same period. Alternative investments also returned 9.60%, reflecting interest and dividend income as well as currency effects.
In the end, NPS's first-half portfolio reflected a classic risk-asset-led pattern, with stocks lifting returns while bonds lagged behind.
In particular, since domestic stocks returned more than 100%, a further rise in stock market volatility could widen fluctuations in the fund's overall return. That makes the second half of the year a key point to watch.
Kim Sung-ju, Chairman of the National Pension Service, also pointed to the possibility of greater volatility in the second half.
Kim said, "In the first half, we were able to deliver stable results thanks to favorable conditions in both domestic and overseas stock markets," adding, "In the second half, there has been some fluctuation in returns due to high volatility, but we are still maintaining solid performance." He continued, "We will do our best to achieve strong results again this year by generating long-term, stable returns through thorough risk management and diversified investment."
An investment banking industry official noted, "The figures of 107% for domestic stocks and -3% for domestic bonds show just how extreme the first-half performance gap was across asset classes," adding, "In the second half, NPS's annual results will depend on its ability to rebalance in response to stock market corrections and interest rate swings."


[email protected] Kim Kyung-a Reporter