The National Pension Service (NPS) plans to use “untact technology” more aggressively in the post-coronavirus era when it invests in alternative assets to resolve difficulties related to on-site due diligence, chief investment officer Hyo-Joon Ahn said at a conference in Seoul.
He said it would try harder to be proactive on unexpected risks in the market, while seeking active investment strategies.
Ahn made the remarks while giving a keynote speech on Friday (June 26) at an international conference held by the Institute for Global Economics and Hana Bank at the Lotte Hotel under the theme of “Economic Paradigm Shifts In The Post-COVID19 Era and the Future of Finance.”
“We plan to resolve the difficulties of on-site inspections through the so-called ‘untact technology’,” Ahn said, referring to the difficulties of pursuing alternative investment due to the Covid-19 pandemic. “Untact” means having no face-to-face contact. “Untact technology will become a new trend, changing existing investment procedures, and NPS will actively respond to and capture it,” he added.
Ahn believes this will be the most important factor to emerge in alternative investment. “We are paying close attention to it because the coronavirus has made face-to-face contact difficult and increased online contact, causing related projects to draw more attention,” he said.
Ahn noted that the Ministry of Health and Welfare and National Pension Service Investment Management have been closely monitoring financial markets since the end of February as volatility has soared due to the pandemic.
“NPS, as a long-term investor, is having difficulty in meeting the expected return as central banks are maintaining a low rate environment to boost the economy during the coronavirus pandemic,” Ahn said. “Therefore we need to diversify our investment strategies to achieve stable and high returns.”
Ahn emphasized the importance of having both an “active core strategy” and an “active opportunistic strategy.” The first means pursuing high returns by investing in high-quality assets, and the second investing aggressively in relatively undervalued assets. NPS plans to purchase mortgage-backed securities and corporate bonds through the latter.
“We plan to manage our portfolio and diversify assets based on these strategies,” he said.
He also emphasized that the NPS should strengthen environmental, social and governance (ESG) investment, as it was suitable as a long-term strategy.
“National pensions, including NPS, should consider ESG investment to manage risk and boost their return on investment, since ESG strategies have proven resilient to downward pressure during the crisis,” Ahn said. (Reporting by Jinwon Lee)