Assetplus Investment Management Co. returned the remaining funds Korea’s National Pension Service (NPS) placed under its management in protest of the major institutional player’s myopic investment strategy.

The rare act of “rebellion” by a small player against the mighty institution that oversees assets of over $500 billion was revealed in a letter Kang Bang-chun, chairman of Assetplus, sent to then-NPS chief investment officer Kang Myun-wook in July, and disclosed to the Maeil Business Newspaper.

Kang in the letter argued against the NPS’ move of taking out 150 billion won ($133 million) in a stock fund his company ran just because it underperformed the composite stock price index in the last year regardless of double-digit returns the fund has awarded over the past years.

“The all-stock fund has awarded the NPS an aggregate return rate of 508 percent over the last 15 years. It has outperformed the benchmark index by 307 percentage points during the period. We are outraged that the institution withdrew from the fund merely for recent year`s performance,” he said.

His company returned another 270 billion won the NPS placed under its management for investment in large-cap stocks from 2014 in a show of defiance to the country’s biggest institutional client.

The Assetplus stock fund in which NPS invested 150 billion won in 2002 yielded 21 percent over the past three years, outperforming the benchmark stock index by four percentage points. Over the last five years, it yielded 60 percent to beat the benchmark index by 34 percentage points.

The NPS took out the money in late June when the yield over the last year underperformed the headline index by 7 percentage points.

“We refuse to manage assets for a client whose eyes are on immediate results,” he said.

The NPS demands 20 percent yield over a year, 40 percent over three years, and 40 percent in five years when consigning investment capital under asset managers. It will up the yield target for three and five years to 50 percent within the year.

By Choi Jae-won

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]