Against the Odds: Korea’s National Pension Service Success in a Slower-Growth Era

Abstract

In the face of an aging population, slowing birthrates, and gradually dwindling investment opportunities in the local market, Korea’s National Pension Service (NPS) has grown into the fourth largest public pension fund in the world with over KRW 400 trillion in assets under management as of February 2013 – up three-fold in less than ten years. Given the significance and implications of NPS’ apparent success for practitioners and the broader investment community, this case study seeks to provide a comprehensive background to the development and recent investing strategies of NPS – specifically with regards to: (1) asset diversification; (2) globalization of investment; and (3) enhancement of risk management. In addition, this case study examines the role of governance and internal management in shaping and executing NPS strategies. Through a critical examination of the NPS case, some light may be shed on the applicability of the investment model for other institutions seeking to enhance their longer-term performance.