이 기사는 2020년 02월 21일 08시00분 thebell에 표출된 기사입니다

South Korea’s National Pension Service (NPS) has decided to maintain its excess-return target at 0.22 percentage points in 2020, after comments from Ahn Hyo-joon, the fund’s CIO, who emphasized the need to address a shortage of investment professionals to manage its assets which continue to increase.

Members of the NPS investment management committee – the highest decision-making body within the public pension fund – have chosen an option of leaving the fund’s excess-return target unchanged at 0.22 percentage points over an alternative proposal that would raise the target to a range of 0.24 to 0.29 percentage points after a heated debate, according to minutes of their late-December meeting released last month.

Ahn, who attended the meeting as an observer, started by saying that he felt cautious about talking about his thoughts, as he is not a member of the committee.

“I’m well aware it is one of our mandates that we should make our best efforts to achieve the excess-return target,” Ahn said. But, he added that, with the current capacity of the fund’s staff, an increase in the volume of passively-managed assets would be unavoidable, especially given that the total assets of the fund is expected to grow to above 730 trillion won ($620 billion) this year.

The NPS has recently been accelerating efforts to increase its allocation to overseas assets with an aim to enhance its return. This shift in investment focus means that the pension fund now needs to source deals for its overseas portfolio – both transitional and alternative – to deploy three to four trillion won on a monthly basis, or 40 to 50 trillion won a year, Ahn said, adding that the fund has insufficient staff to cover such growing investment activity.

Currently, with the fund’s 730 trillion won of assets under management, each portfolio manager at the NPS manages about three trillion won on average. Given this reality, an excess-return target above the current level can hardly be achieved, he emphasized.

“I hope the members of the investment management committee set the excess-return target that is realistically achievable given the fund’s size and organizational capacity,” Ahn said.

Especially with respect to alternative investments, he pointed out that the number of staff who have enough expertise to source deals and perform due diligence is extremely insufficient. The pension fund’s investment in alternative assets has increased to 25 trillion won in 2019 from 15 trillion won in 2018.

Minister of Health and Welfare Park Neung-hoo, who is a member of the investment management committee, responded Ahn’s comments at the meeting by saying that he would see what the government can do to address the shortage of staff.

(By reporter Han Hee-yeon)