This article was published on May 6, 2026, at 16:30 on Signal, the capital markets compass.
The National Pension Service's fund size has topped 1,700 trillion won, buoyed by the KOSPI's breakthrough of the 7,000 mark. The fund has grown by more than 250 trillion won from the end of last year, as it has already posted returns in just four months this year comparable to those of all of last year.
According to government sources on the 6th, the NPS fund is believed to have surpassed 1,700 trillion won on the day. The fund stood at roughly 1,473 trillion won at the end of last year, but with its size exceeding 1,700 trillion won as of the day, it is estimated to have earned around 250 trillion won this year. The fund's return rate is also reported to be approaching last year's 18.82%.
The KOSPI has been rising rapidly this year. As the index approached 5,000 points at the start of the year, the fund's size topped 1,500 trillion won for the first time ever. Last year, the NPS earned 260 trillion won from domestic equities on the back of a strong KOSPI, and that performance is continuing this year.
With the NPS fund growing rapidly, the decision early this year to suspend the ceiling on domestic equity allocation is being credited as a winning move. At the time, some in the market criticized the move as mobilizing the NPS to prop up the domestic stock market. Critics argued that having the pension fund—which manages its portfolio independently across overseas equities and other assets—raise its domestic equity allocation could compromise its management independence.
In January this year, reflecting domestic and overseas market conditions, the government raised the NPS's domestic equity investment ratio for the year to 14.9% from 14.4%, a 0.5 percentage point increase, while also temporarily suspending "rebalancing"—the mechanical selling of stocks to keep the weighting within the permitted range when it deviates from the target.
The ceiling increase and rebalancing suspension are credited with enabling the sharp growth in the NPS fund. In fact, thanks to the government's suspension of the domestic equity ceiling, the fund's domestic equity share stood at 24.5% as of February. The NPS's domestic equity holdings are estimated at around 400 trillion won based on market value.
Markets are now focused on the Fund Management Committee meeting to be held this month. The government plans to finalize its medium-term asset allocation plan for 2027 to 2031 at the end of this month through the committee. The committee is also expected to raise the strategic asset allocation (SAA, ±3 percentage points) band, which allows flexible management even when the equity share exceeds the target.
With the NPS's domestic equity weighting having surpassed 20%, the ceiling is expected to be set to allow more flexible investment management. A sharp reduction in domestic equity weighting would force the fund to mechanically sell holdings to meet the ceiling. Given the NPS's influence on the domestic stock market, observers expect the fund to minimize forced sales, which could cause significant market shocks.
"If the NPS's equity weighting ceiling had not been suspended at the start of the year, the fund's returns would not be as large as they are now," an investment banking industry official said. "Having already matched last year's performance in just four months, there is a chance the fund could post a record-high return again this year."
A government official declined to comment on the scale of domestic equity investment, saying, "We cannot confirm specific figures."
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