NPS Return Falls to 14.84% as Equity and Bond Performance Diverge [fn Market Watch]

[Financial News] The National Pension Service's (NPS) return fell sharply from 27.22% to 14.84%. The decline in domestic equity returns from 107.37% to 60.11% was a major factor.
According to a disclosure from National Pension Service Investment Management on the 30th, the NPS's year-to-date fund management return stood at 14.84% as of the end of July. The fund's size fell by approximately 10% from 1866 trillion won at the end of June to 1684 trillion won a month later.
Returns by asset class were as follows: domestic equities (60.11%), overseas equities (10.72%), domestic bonds (-3.36%), overseas bonds (0.72%), and alternative investments (4.09%; fair value not reflected).
National Pension Service Investment Management explained, "Despite difficult domestic and international conditions, including uncertainties related to the war in the Middle East and concerns over inflation, stock markets posted solid returns on the back of robust earnings, particularly in the semiconductor sector."
It added, "Domestic equities posted high returns and drove the fund's overall management performance, supported by robust earnings, particularly in the semiconductor sector, despite uncertainties related to the war in the Middle East and concerns over the sustainability of AI investment. Overseas equities also rose, helped by solid earnings, particularly among technology stocks." It said, "Domestic and overseas bonds faced rising interest rates amid inflation concerns and a tightening stance by major central banks. Domestic bond returns declined as higher interest rates reduced the valuation of bonds, while overseas bonds recorded positive returns."
Meanwhile, the investment banking industry viewed the decline in returns not as a shift to losses, but as an adjustment following the surge in returns driven by a sharp rally in South Korean stocks during the first half of the year.
An investment banking industry official noted, "Although the NPS's overall return has declined, it remains in the double digits, and it is noteworthy that domestic equities continue to deliver returns in the 60% range." The official added, "As bond returns have turned negative due to rising interest rates, the gap between equity and bond returns could determine the fund's overall performance in the second half of the year."

[email protected] Kang Gu-gwi Reporter