In a year when institutional investors faced huge losses on investments, the NPS has not only protected its capital but made an annualized 5% net return on its assets in 2008.
It made the decision to reallocate from international exposures to domestic fixed income in time to save itself from the worst effects of September and October of 2008, but in September and October it realised the incredible value on offer in the market and quickly moved into domestic corporate credit and equities, moves that have brought handsome returns year-to-date.
The NPS also redeemed about a third of its $30 billion of overseas investments to help defend itself against the financial crisis. This month, it will resume funding international mandates.
It has also worked with strategic partners to continue to professionalize and upgrade its capabilities, both in investments and in risk management. The NPS is currently in the process of installing an integrated risk-management system.
Many of these moves are due to the organization’s ability to get its management committee to respond in a timely fashion. It also reflects the willpower of its CEO, Park Hae-choon, who is not a bureaucrat but a banker, the former head of Woori. The decision in early 2008 to put an experienced capital-markets practitioner in charge during a crisis proved astute.