Pension funds expand portfolio amid economic slump

SEOUL, Sept. 26 (Yonhap) -- South Korea's pension funds diversified their investment portfolio in the first half of 2013 from a year earlier, data showed Thursday, in an apparent bid to tackle falling returns from equity assets.

According to the data by the Korea Capital Market Institute, the size of alternative investments in the National Pension Service (NPS) came to 36.9 trillion won (US$34.3 billion) at end-June, up 11.8 percent from last year.

Alternative investments refer to non-equity assets, which include property assets, social overhead capital, private equity funds and hedge funds.

The number marks a steep rise compared to a 3.5 percent and 1.8 percent gain in stock and bond investments, respectively, over the cited period. The NPS is the country's largest institutional investor.

Market watchers said the increase in the size of alternative assets came as local pension funds suffered a decrease in their investment returns as the country has landed into a slow-growth pace amid low interest rates.

The Korea Teachers Pension (KTP), a fund for private school personnel, also expanded their investment on alternative assets by 7.7 percent over the cited period, and the Korea Teachers Credit Union (KTCU) held a comparable figure of 12.4 percent.

The portion of such assets in the NPS's portfolio came to 9.2 percent this month, while those of the KTP and the KTCU came to 14.1 percent and 23.8 percent, respectively.

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