[Public Forum] The North Star of National Pension Fund Management (2026.01.26.)

The first 2026 meeting of the National Pension Fund Management Committee is being held today, January 26.

With the pressure for portfolio rebalancing growing amid a combination of a high won–dollar exchange rate and a sharp rise in domestic stock prices, this meeting is likely to reexamine the overall investment strategy, including asset allocation, currency hedging, and the pace of expanding overseas investment.

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The dangerous sign detected in recent remarks by policy authorities is a so-called ‘category mistake’ — treating the National Pension as if it were the government’s fiscal budget.

Exchange-rate stabilization or the promotion of specific industries is closer to being a ‘tail’ — an effect that can appear incidentally as a byproduct of fund management. If that ‘tail’ is allowed to wag the ‘body,’ meaning the stable payment of pension benefits, this becomes an approach that puts the cart before the horse.

For the slogan “Only if the national economy thrives can the pension also thrive” to be persuasive, the link between the two must be verified against the standards of investment logic and risk management.

Otherwise, this can only degenerate into a fallacy of composition that trades an anticipated loss for a vague expectation of trickle-down effects. The demand to expand the domestic equity allocation cannot be justified by an emotional appeal to ‘patriotic investment.’

Objective evidence must be presented that expected returns can be raised without undermining diversification effects, and the conditions and limits for adjusting the allocation, together with rules for reverting the allocation when market conditions change, must be designed in advance.

Investment in national strategic industries is, in principle, an area that should be handled by the budget and policy finance, and even if the fund participates, it must be premised on investment standards consistent with market rates of return and a strict cap.

The stewardship code and ESG investment likewise must be positioned not as moral slogans but as tools for long-term risk management, and their standards and procedures must be codified so that they are not swayed by political winds from outside. The recently discussed dollar bond issuance in the style of Canada’s CPPIB (Canada Pension Plan Investment Board) appears financially engineered and sophisticated, but the risks behind it also need to be examined together.

This technique, which seeks a ‘natural currency hedge’ effect by matching the currencies of assets and liabilities, can only be justified when it faithfully serves the internal purpose of the fund’s risk management.