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NPS to invest $867 mn in hedge funds this year

Collected: 2016.04.09

Distributed: 2016.04.11

Source: Go Direct

South Korea’s largest investor National Pension Service (NPS) will invest 1 trillion won ($867 million) in funds of foreign hedge funds this year as part of efforts to diversify its asset allocation, according to the country’s health ministry.

According to the Ministry of Health and Welfare on Friday, the world’s third largest pension fund determined the operational goal of its hedge fund investment and set a benchmark to assess performance of its investment in hedge funds at a public pension fund operation committee meeting. Investment will be made in funds of hedge funds and it aims to complete selecting operators in the first half. The Blackstone Group L.P. and Grosvenor Capital Management, L.P. appear to be very strong candidates. It would also gradually increase investment in hedge funds depending on market conditions.

In addition, the committee set a guideline allowing NPS to gradually reduce its current 100 percent hedge on its allocation to foreign bonds to zero by 2018. According the guideline, it will maintain the ratio at 100 percent until the end of this year and reduce it to 50 percent by late 2017 and zero by late 2018. Investment amount would be adjusted depending on foreign exchange moves.

NPS is the world’s third largest pension fund with more than 500 trillion won ($415 billion) in assets under management, according to the pension service.

By Kim Hyo-hye

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