The National Pension Service (NPS) of South Korea has disclosed more detailed annual statistics on its alternative investments in an effort to provide the same transparency it exercises with investments in other assets such as stocks and bonds.
Until last year, NPS just provided information on how much was invested in domestic and foreign alternative assets. However, in the disclosure of 2019 alternative investment statistics released on August 12, the state pension scheme has revealed more detailed data categorized by asset type (such as private equity, real estate and infrastructure), region and strategy.
The pension fund’s management committee approved such changes at a meeting on July 31 to improve transparency in the fund’s management. The move is also seen as part of an effort by NPS to keep up with its foreign peers which disclose their investment information in a more detailed manner.
NPS plans to step up the level of information disclosure in phases. So far it has revealed the invested amount and asset type of the 10 largest alternative investments each year. From next year, under the new rule, it will report not only the invested amount and asset type but the fund names of its entire alternative investments. If necessary, partial disclosure will be allowed on a case-by-case basis. NPS is said to be planning to contact alternative investment managers in its roster later this year to discuss the matter.
According to annual data released last week, NPS invested a total of 73.7 trillion won ($62 billion) in alternative assets in 2019, of which 50.8 trillion won or about 68% was invested abroad. By asset type, real estate accounted for the largest share with 36.6% (27 trillion won) followed by private equity with 32.6% (24 trillion won), infrastructure with 28.5% (21 trillion won) and hedge funds at 2.3% (1.6 trillion won).
The pension scheme put 54.8% of its real estate investment for the year in core-plus funds while investing 22.8% and 17.9% in value-added and opportunistic strategies respectively. By region, Asia accounted for 41% followed by North America with 31% and Europe with 16%.
Of the private equity investment, buyout strategies accounted for the biggest portion at 62.4%, followed by mezzanine and distressed strategies. Investment was made largely in Asia with a share of 42.6% while North America and Europe accounted for 20.8% and 11.3% respectively.
NPS put more than half of the infrastructure investment in core-plus funds and about a fifth in value-added funds. Asia also accounted for the largest share with 42% followed by North America with 17%. (Reporting by Hee-yeon Han)