May 30, 2018 / 4:29 AM / 10 months ago

REFILE-South Korea's $579 bln pension fund to boost overseas investment

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    By Haejin Choi
    SEOUL, May 30 (Reuters) - South Korea's National Pension
Service (NPS) said on Wednesday it would significantly increase
its asset allocation to overseas and alternative investments to
diversify its holdings.  
    NPS, the world's third-largest pension fund with around 68
percent of its $579 billion portfolio invested in South Korea,
has been pressured to diversify beyond the limitations of South
Korea's economy.
    The fund is seen as too big for South Korea's relatively
limited opportunities, and studies suggest the fund cannot earn
the returns needed to sustain the fund for decades to come if it
continues to concentrate on local assets. 
    The fund said in a statement that it aimed by end-2023 to
have around 30 percent of its assets in overseas stocks and
around 5 percent in overseas bonds, up from 17.4 percent and 3.8
percent respectively as of end-2017. 
    NPS' projected that its alternative investments such as real
estate would reach 92.6 trillion won, or 12.7 percent of total
assets, by end-2019 and was targeting 15 percent by the end of
    The NPS, which pays retirement pensions to all South Koreans
who contribute to the fund, had 625.9 trillion won ($578.57
billion) in assets under management as of March, which was
expected to swell to 2,561 trillion won by 2043, it said on its
investment management website.     
    The fund, which holds key stakes in nearly all major South
Korean companies thanks to its size and concentrated investment
in the local market, also plans to consult Korean Air Lines'
            management over the recent controversy surrounding
the family that owns its parent conglomerate. 
    Korean Air Lines             Chairman Cho Yang-ho stepped
down from his post of co-chief executive at budget affiliate Jin
Air            , amid public backlash prompted by his younger
daughter Cho Hyun-min's behavior. She is being investigated by 
police after she allegedly threw water at a person attending an
April business meeting.              

($1 = 1,081.8000 won)

 (Reporting by Haejin Choi
Editing by Eric Meijer)
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