The National Pension Fund of Korea has crossed a historical milestone by allocating more than half of its assets to stocks, underlining a strategic pivot from traditional safety toward greater profitability.

According to data released on June 30, 2025, the Fund’s total assets stood at KRW 1,269.1 trillion. Of this amount, KRW 635.6 trillion—accounting for 50.1%—was invested in equities, including both domestic and foreign markets. This is the first time in the Fund’s history that the share of stocks has exceeded 50%.

A decade ago, the fund’s asset allocation looked markedly different. At the end of 2015, bonds dominated the portfolio at 56.6%, while equities accounted for just 32.2%. By June 2025, the figure had flipped: bonds were down to 33.0%, replaced by a much more prominent share of stocks. In essence, the National Pension Fund has reduced its reliance on ‘safe deposits’ (bonds) and made a decisive move toward higher-yield, higher-risk ‘equity investments.’

What stands out is that the core of this equity surge lies in overseas markets. Of the current 50.1% stock allocation, foreign equities comprise 35.2%—more than double the 14.9% held in domestic stocks. There are two critical reasons behind this trend. First is diversification. Concentrating over KRW 1,200 trillion in the Korean market would be akin to ‘putting all the eggs in one basket.’ By diversifying globally, the Fund aims to mitigate risks associated with potential volatility in the Korean economy.

Second, the move helps address the problem of outsized influence. The National Pension Fund has long acted as a ‘giant whale’ in Korea’s stock market, with its trading decisions capable of swinging the market. Increasing exposure overseas helps ease such market distortions while unlocking new profit opportunities in the broader global landscape.

This evolution is drawing intense attention from international financial markets. Adjustments in investment direction by this “super whale”—holding over KRW 1,200 trillion in assets—can ripple across financial centers from New York to London.

The driving force behind this bold approach is growing concern over the Fund’s potential depletion. As Korea faces persistently low birth rates and an aging population, the number of contributors is shrinking even as beneficiaries grow. In response, the Fund has completely revamped its strategy, seeking higher returns via more aggressive investments to stave off depletion.

Performance numbers already reflect this change. The Fund’s assets under management soared past KRW 1,400 trillion at the end of last month—an increase of over KRW 200 trillion in just 10 months, up from KRW 1,212 trillion at the end of last year. Domestic blue-chip stocks such as Samsung Electronics and SK hynix have led with a 60% gain, while foreign stocks, bonds, and alternative investments all recorded positive trends. This marks a dramatic turnaround from a negative return of -0.87% in the same period last year.

However, this bold expansion into risk assets brings new challenges. Managing volatility—ranging from domestic and global market swings to currency risks and sector-specific exposures—is now critical. Operational independence and accountability will be key to enabling nimble responses as markets shift.

Nevertheless, this moment—where stock investments surpass 50%—signals a realignment from ‘overwhelming safety’ to ‘sustainable returns.’ Attention is mounting on how this strategic pivot will affect the nation’s retirement stability, the Korean capital market, and even financial markets worldwide.

Note “This article was translated from the original Korean version using AI assistance, and subsequently edited by a native-speaking journalist.”

Photo=Yonhap News Agency