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National Pension finalized the trust operation plan worth 132 trillion won for next year

  • Date : 2012-01-02
  • Hit : 4690

National Pension finalized the trust operation plan worth 132 trillion won for next year

-about 38 trillion won increased compared with the amount of the trust operation fund in Oct. 2011 (93.3 trillion won)

□ Ministry of Health and Welfare announced that it will operate 132 trillion won, about 33% of

the entire financial asset (approx. 396 trillion won) of the national pension fund on consignment in

2012.

○ More specifically, by asset, 55.0% (42.1 trillion won) of domestic stock will be operated on

consignment, 10.0% of domestic bond (23.5 trillion won), 85% of overseas stock (27. 4 trillion

won), 60% of overseas bond (9.7 trillion won) and 80% of alternative investment (29 trillion won

will be operated on consignment and the extent of an allowed weight of the consignment

operation will be kept at the previous year’s level (±10%p in the case of domestic stock).

- The weight of the amount on consignment will be kept at the previous year’s level for domestic

stock, overseas stock and alternative investment.

- The weight of the entrusted amount for overseas stock greatly reduced from the previous level

(5%).

- The weight of the entrusted amount for domestic stock slightly increased from the previous

year’s level (+1.5%).

< Target weight and allowed extent of the fund to be operated on consignment in end of 2012>

(Unit:%)

Category

2011(A)

2012(B)

Target weight increase/decrease (B-A)

Allowed extent

Domestic stock

55.0

55.0

-

±10.0

Domestic bond

8.5

10.0

+1.5

±1.5

Overseas stock

90.0

85.0

5.0

±10.0

Overseas bond

60.0

60.0

-

±10.0

Alternative investment

80.0

80.0

-

±15.0

Overall finance

29.9

33.3

+3.4

○ According to this, the size of the fund to be operated on consignment by the end of 2012 (33.3% of overall finance, approx.. 132 trillion won) is expected to be greater by 3.4% (38 trillion won) than the size of the size of the fund to be operated on consignment at the end of Oct. in 2011 (27.3% of overall financial asset, approx. 93. 3 trillion).

< The amount expected to be operated on consignment at the end of 2012 and its weight>

(Unit: trillion won, based on the market price)

Category

Oct. 2011

End of 2012

Consignment fund increase/decrease

(B-A)

Overall size

Amount to be entrusted

(A)

Weight of entrustment

‘Target weight at the end of 2011

Overall size

Amount to be entrusted (B)

Weight of entrustment

Finance

342.3

93.3

27.3%

29.9%

396.4

131.9

33.3%

+38.6

Domestic stock

62.6

31.5

50.4%

55%

76.5

42.1

55%

+10.6

Domestic bond

220.9

18.9

8.6%

8.5%

235.0

23.5

10%

+4.6

Overseas stock

19.2

17.0

88.6%

90%

32.2

27.4

85%

+10.4

Overseas bond

14.5

8.3

56.9%

60%

16.2

9.7

60%

+1.4

Alternative investment

24.7

17.6

71.2%

80%

36.5

29.2

80%

+11.6

National Pension entrusts some of its fund to outsider fund operators to utilize their expertise

in enhancing the profitability and to disperse risks.

○ In the case of domestic stock, the weight of the fund to be operated will be kept at this year’s

level (set at 55%, the same as 2011) given the size of new investment, market status and the

increase of reliance on the fund by domestic fund management companies, etc.

○ The portion of domestic stock fund to be entrusted is slightly increased (10%, 1.5% up from

8.5% in 2011) in order to enhance extra revenue through expansion of entrusted fund investment

while the direct operation of domestic stock will be focused on security and stability.

○ When it comes to overseas stock, all of them had been operated on consignment until 2009

but direct operation of it is being slightly increase for flexible adjustment of the portfolio and

timely response to the market conditions. The weight of the fund to be operated on consignment

has slightly reduced from the previous year (85%, 5% down from 90% in 2011).

○ In the case of overseas bond, the weight of the consignment fund will remain the same as this

year (set at 60%, the same as 2011) since it was determined that the role of direct operation

allowing flexible operation of safe asset such as global bonds, etc due to increase of uncertainty

in global economy will become important.

○ Given that it is difficult to adjust the weight of the amount to be operated on consignment in a

short-term in the case of alternative investment, this year’s weight will be maintained (set at

80%, the same as 2011).

* The entrustment of alternative investment means that the management of already invested

asset is being entrusted unlike other asset groups and actual decision making in investment is

made by the National Pension Service.

This was decided at the sixth National Pension Fund Operation Committee (Chair, Health and

Welfare Minister Rim, Chae Min) on 22 Dec. (Thur.) 2011.

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