"The secret to our high returns is not staying with traditional assets like stocks and bonds, but allocating about 25% to alternative assets centered on gold while concentrating on US growth stocks," said Sung Il, head of Korea Investment & Securities' Retirement Pension Division 2.
In an interview with Seoul Kyungje on January 5, Sung explained the background behind Korea Investment & Securities ranking first in both aggressive and stable investment products in the Financial Supervisory Service's third-quarter disclosure of default options for retirement pension plans.
Korea Investment's "High-Risk BF-1," which recorded the highest third-quarter return of 32.83% among all default option products nationwide, consists entirely of "Korea Investment Mysuper Auto-Growth (High-Risk)." The product's portfolio is composed of 50.5% stocks (including 45.8% US growth stocks), 17.8% bonds, 25.6% alternative assets (including 21.4% gold), and 6.1% liquidity. Analysts attribute the strong performance to bold allocations to US growth stocks and gold during the "everything rally" market conditions. The fund significantly outperformed "Woori Investment Securities Aggressive TDF2" and "Samsung Life Default Option Aggressive TDF1," which tied for second place with returns of 22.27% during the same period.
Korea Investment also ranked first among medium-risk products. This product comprises 30% growth-oriented and 70% stability-oriented allocations, with the stable portion consisting of 13.9% stocks, 77.2% bonds, 7% alternative assets (including 5.8% gold), and 1.9% liquidity. Its one-year return of 18.19% was more than double the 8.75% recorded by Samsung Life and Hanwha Life's balanced products. The performance even exceeded some competitors' high-risk products. "Asset allocation determines 80-90% of returns," Sung emphasized. "Rather than trying to time the market, how you combine different assets is far more important."
Sung advised individual investors interested in retirement pensions to invest long-term and diversified in exchange-traded funds (ETFs) that track indices such as the S&P 500 and KOSPI 200. "Index ETFs directly share market returns, so they tend upward over the long term with much lower volatility than individual stocks," he said. "Even in retirement pensions, using a passive strategy as your foundation can help you expect more stable returns." Regarding the recent sharp rise in exchange rates, he emphasized that "for investors who already hold won-denominated assets, diversified investment including currency exposure when investing in global assets better aligns with asset allocation principles."
Korea Investment was also recently selected as an "Excellent Retirement Pension Provider" by the Ministry of Employment and Labor. The company's "Contribution Payment Prediction Service" for defined benefit (DB) plan companies received particularly high marks. "From a company's perspective, the biggest burden is suddenly being notified at year-end that they need tens or hundreds of billions of won for DB contributions," Sung said. "The positive evaluation recognized our sophisticated system that estimates required reserves several years in advance."
Korea Investment reorganized its structure earlier this year by establishing a Retirement Pension Division within its Individual Customer Group to expand its retirement pension business. Three organizations now operate—two sales divisions (Retirement Pension Divisions 1 and 2) and an operations division—accelerating business expansion through healthy competition. As a result, Korea Investment's retirement pension reserves expanded from 15.81 trillion won in the fourth quarter of last year to 18.64 trillion won in the third quarter of this year. Growth in defined contribution (DC) and individual retirement pension (IRP) plans was particularly notable. DC reserves increased by more than 1 trillion won from 3.80 trillion won in Q4 last year to 4.86 trillion won in Q3 this year, while IRP reserves grew by nearly 2 trillion won from 4.60 trillion won to 6.49 trillion won over the same period. "DB used to be the center, but now DC and IRP are clearly the growth drivers," Sung said, citing three reasons: the diminished appeal of DB due to salary peak systems, career planning that assumes frequent job changes among the MZ generation, and increasing demands from labor unions and employees to convert to DC plans.
"DB balances (7.29 trillion won) are still the largest, but the growth rate of DC and IRP is overwhelming," he said. "The company's sales strategy will be strengthened to focus on DC and IRP going forward."