Korea’s National Pension Service (NPS) is set to open an office in Singapore in the second half of this year as part of its portfolio diversification drive.
The world’s fourth-largest pension fund is in the process of transitioning its $430 billion portfolio away from domestic fixed income, which still makes up 55% of its assets, into international equities and bonds, as well as alternatives.
Earlier this year NPS announced plans to make its first investment into hedge funds after studying the asset class for eight years, as reported.
Last December AsianInvestor confirmed that NPS was seeking to set up an Asian investment office, potentially based in Hong Kong or Singapore, as reported.
And AsianInvestor understands NPS has now decided to open an office in Singapore in the second half, potentially in September.
Initially this will be staffed with a handful of people covering South and Southeast Asia, including India and Australia. “They [the staff in Singapore] will mostly be looking for alternative investment opportunities,” said a senior member of staff.
The source added that NPS was also seeking to establish a new foreign exchange platform, having separated its FX team as a separate unit last year.
Lee Kyung-Jik, head of NPS' global public market investment division, is due to appear at our forthcoming 10th annual Asian Investment Summit in Hong Kong on May 20-21.
He will join a panel debate on long-term investing, alongside Wu Yibing of Temasek, Paul Smith of the CFA Institute and Garry Hawker of Mercer.
In advance, Lee has told AsianInvestor that yield-chasing behaviour in the low-rate environment combined with the withdrawal of investment banks from secondary market bond trading has given investors additional reasons to be long-term oriented.
But at the same time he acknowledged that NPS also faced short-term pressures, given that it discloses its returns on a monthly basis and its holdings annually.
Lee has worked at NPS for six years, a period when the fund’s diversification from a home bias has gathered speed. He noted that when he joined, NPS had $6 billion in global equities. That has since risen to $55 billion.
NPS outsources 80% of its global equity holdings to about 50 external fund managers, with the remainder – largely passive – managed internally. “We have the intention to increase internal management,” added Lee.
He will be appearing on a panel discussion entitled The Long-Term View for Long Term Investors at AsianInvestor’s Asian Investment Summit on the morning of May 20. To see the agenda for that event, please click here.