"Minimizing Market Impact of Rebalancing"... NPS Holds 6th Fund Management Committee Meeting

Review of Consignment Managers' Exercise of Voting Rights
Performance Bonus Payout Rate for Fund Managers Set at 78.6%

Yonhap News Agency

The National Pension Service announced that, starting in the second half of this year, it will review the proxy voting activities of domestic equity external asset managers and reflect the findings in its performance evaluations. Additionally, considering the fund's solid returns amid the recent stock market boom, the payout rate for performance-based bonuses for employees at the Fund Management Headquarters has been set at 78.6%.

On July 2, the National Pension Fund Management Committee held its sixth meeting of the year at the Government Complex Seoul and approved two agenda items reflecting these decisions.

First, the National Pension Service will prepare reports on seven stewardship activity items and twelve principle-based compliance checkpoints starting in the second half of this year. These reports will be reviewed by the Stewardship Responsibility Subcommittee under the Fund Management Committee and then made public. In particular, domestic equity external asset managers will be evaluated on their stewardship activity frameworks, conflict of interest management, and the appropriateness of their proxy voting. Based on these results, the National Pension Service will take these factors into account when allocating additional funds or retrieving existing allocations.

In addition, the committee approved the 2025 plan for evaluating the National Pension Fund’s management performance, as well as the performance-based bonus payout rate for the Fund Management Headquarters.

The cumulative five-year time-weighted rate of return for the National Pension Fund’s financial sector is 9.75%, which is 0.16 percentage points higher than the benchmark rate of return of 9.59%. The rate of return by asset class was also 9.75%, exceeding the benchmark rate of 9.59%.

By asset class, the rates of return were as follows: domestic stocks at 11.24%, overseas stocks at 17.82%, domestic bonds at 1.39%, overseas bonds at 6.24%, and alternative investments at 12.75%. Accordingly, the performance-based bonus payout rate is set at 78.6%.

Meanwhile, Minister of Health and Welfare Chung Eun-kyung also mentioned the National Pension Service’s domestic stock rebalancing (asset allocation adjustment) on this day. Although the National Pension Service’s domestic stock allocation had already greatly exceeded its target of 14.9% (with a deviation limit of ±5 percentage points) as of April, it deferred rebalancing and did not sell domestic stocks. However, this temporary deferral of rebalancing ended this month, and rebalancing resumed in July.

Minister Chung stated, “Back in May, the Fund Management Committee adjusted the rebalancing rules, including reducing the maximum daily rebalancing volume, to enhance profitability and stability while also minimizing the impact on the market. Going forward, even if rebalancing occurs, we will closely monitor the process to ensure that the market impact is minimized.”

This content was produced with the assistance of AI translation services.