The National Pension Service of Korea (NPS) announced a truly historic performance for 2025, posting a preliminary return of 18.82%.
This stellar result, the best since the fund's establishment in 1988, was powered by a perfect storm of positive factors. While the entire portfolio performed well, one asset class stood out dramatically: domestic stocks. The incredible 82.44% return from Korean equities was the main engine behind this record-breaking year. It’s a figure that demands a closer look at what happened in the Korean market.
First and foremost, 2025 was the year of the AI and semiconductor supercycle. The KOSPI index soared by an astonishing 75.6%, led by explosive gains in its two largest companies. Samsung Electronics and SK hynix, key players in the global HBM (High Bandwidth Memory) market, saw their stock prices surge by 124.5% and 280.3%, respectively. As the NPS holds significant stakes in these companies, their performance directly translated into massive gains for the pension fund.
Second, this domestic rally was supported by a favorable global environment. The U.S. Federal Reserve pivoted to a more accommodative stance, cutting its key interest rate three times in the latter half of 2025. This move boosted the valuation of global stocks and bonds, contributing to the NPS's solid returns of 19.74% in overseas stocks and 3.77% in overseas bonds. The fund's recent filings revealed it also reaped substantial gains from its investments in U.S. Big Tech.
Finally, a series of domestic policy measures created a fertile ground for growth. The Bank of Korea's own rate cuts, coupled with market-friendly reforms like the full resumption of short-selling, helped attract foreign capital. Furthermore, pension reforms increased the NPS's capacity to invest in riskier assets, while a strategic currency hedging policy protected its massive overseas investments from unfavorable exchange rate movements. In essence, 2025 was a year where a concentrated bet on the domestic tech boom, amplified by global easing and supportive local policies, paid off spectacularly.
- AUM (Assets Under Management): The total market value of the investments that a person or entity manages on behalf of clients.
- HBM (High Bandwidth Memory): A high-performance computer memory used in conjunction with high-performance graphics accelerators, network devices, and supercomputers.
- FOMC (Federal Open Market Committee): The branch of the U.S. Federal Reserve that determines the direction of monetary policy.