National Pension Criticized for Missing Rebalancing Window as Foreigners Cash In

Critics point out that despite achieving record-high returns in the first half of this year, the National Pension Service (NPS) failed to adjust its assets in a timely manner, ultimately only benefiting foreign investors.

As of the end of May, the NPS's return rate stood at 26.18%, with its accumulated fund surpassing 1,800 trillion won.

Domestic equities, which recorded triple-digit returns, drove the fund's growth, and the proportion of domestic stocks within the total portfolio also exceeded 29%.

The issue is that the NPS delayed mechanical selling to reduce its domestic stock portion, commonly known as "rebalancing," even when its holdings significantly exceeded the target allocation for domestic equities.

The NPS deferred rebalancing under the pretext of mitigating shocks in the highly volatile domestic stock market, but consequently missed the opportune moment to realize profits at the peak.

During this period, foreign investors net-sold approximately 150 trillion won worth of shares on the KOSPI in the first half alone, realizing gains from the rising stock prices.

On the other hand, the NPS faced the sudden stock market crash without shedding its assets.

Due to the sharp decline in the KOSPI after the end of May, the estimated valuation of domestic stock holdings decreased by about 180 trillion won.

This scale largely offsets the effect of delaying the depletion of the fund by four years, which was brought about by last year's investment earnings of 231.6 trillion won.

Given that diversifying risk during surges in specific assets is a fundamental principle of fund management even when considering market stabilization factors, this decision to postpone rebalancing under the guise of market shocks leaves questions regarding the consistency and reliability of the fund management principles.

Reported by Lee Hyeon-yeong | Video by Kim Min-ji | Graphics by Lee Su-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.