[THE INVESTOR] The National Pension Service’s rate of return plummeted to one-fourth its previous year’s level, raising concerns on the operation of Korea’s largest institutional investor that manages 634.6 trillion won (US$569.42 billion) in assets.
From January to April, the NPS reported a 0.89 percent rate of return, according to data released by the state-run pension fund. When converting the value to the annual rate, it comes to 1.66 percent, less than one-fourth of last year’s return at 7.26 percent.
The lackluster performance is largely due to the prolonged vacancy of the top investment job at the pension fund, industry watchers say. The post hasn’t been officially filled since last July when former CIO Kang Myoun-wook resigned before finishing his two-year-term. Cho In-sik, head of global markets, was serving as the acting CIO until recently, when he offered to resign. The CIO’s job is critical as it determines strategy in correspondence to the local market situation. Due to slow growth of the Korean stock market, the NPS, which puts 134.6 trillion won, or 21.2 percent of total assets in local stocks, needs to shift direction in order to mitigate further losses this year.
The NPS is still searching for a suitable CIO, after its three shortlisted candidates failed to meet the qualifications in June. Other key posts at NPS’ investment management organization are vacant as well, including the global public market division, domestic equity division and the global alternative division.
By Ahn Sung-mi (email@example.com)