Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management
– As of May 2022, the National Pension Service of Korea is the world's third-largest pension fund, with assets worth KRW912tn (approximately $US800bn). Of the KRW152tn (approximately $US133bn) invested in domestic equities, 45% is outsourced to external asset managers. Given the absence of pri...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2023-08-01
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| Series: | Seonmul yeongu |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JDQS-12-2022-0027/full/pdf |
| _version_ | 1797737145437257728 |
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| author | Yunsung Eom Mincheol Woo |
| author_facet | Yunsung Eom Mincheol Woo |
| author_sort | Yunsung Eom |
| collection | DOAJ |
| description | – As of May 2022, the National Pension Service of Korea is the world's third-largest pension fund, with assets worth KRW912tn (approximately $US800bn). Of the KRW152tn (approximately $US133bn) invested in domestic equities, 45% is outsourced to external asset managers. Given the absence of prior research on the National Pension Service's (NPS's) management method, this study analyzes its trading strategies and market impact according to the fund management method from 2005 to 2022. The results are as follows: First, the stock characteristics selected by internal management using passive strategies are different from those selected by external management, in which various strategies are combined. Second, the contrarian investment strategy, which acts as a market stabilizer, is a characteristic of the external management trading pattern, while internal management increases volatility and does not improve liquidity. Third, there has been a change in the internal management strategy since 2016, when the fund management headquarters was relocated. This study is practically significant and distinctive in that it confirms the differences between the NPS's two investment methods in terms of trading strategies and market impact. |
| first_indexed | 2024-03-12T13:24:10Z |
| format | Article |
| id | doaj.art-52f5c9f3226a4754aaa75890c0674907 |
| institution | Directory Open Access Journal |
| issn | 1229-988X 2713-6647 |
| language | English |
| last_indexed | 2024-03-12T13:24:10Z |
| publishDate | 2023-08-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Seonmul yeongu |
| spelling | doaj.art-52f5c9f3226a4754aaa75890c06749072023-08-25T10:53:03ZengEmerald PublishingSeonmul yeongu1229-988X2713-66472023-08-0131319721810.1108/JDQS-12-2022-0027Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external managementYunsung Eom0Mincheol Woo1Hansung University, Seoul, Republic of KoreaDepartment of Market Surveillance, Korea Exchange, Seoul, Republic of Korea – As of May 2022, the National Pension Service of Korea is the world's third-largest pension fund, with assets worth KRW912tn (approximately $US800bn). Of the KRW152tn (approximately $US133bn) invested in domestic equities, 45% is outsourced to external asset managers. Given the absence of prior research on the National Pension Service's (NPS's) management method, this study analyzes its trading strategies and market impact according to the fund management method from 2005 to 2022. The results are as follows: First, the stock characteristics selected by internal management using passive strategies are different from those selected by external management, in which various strategies are combined. Second, the contrarian investment strategy, which acts as a market stabilizer, is a characteristic of the external management trading pattern, while internal management increases volatility and does not improve liquidity. Third, there has been a change in the internal management strategy since 2016, when the fund management headquarters was relocated. This study is practically significant and distinctive in that it confirms the differences between the NPS's two investment methods in terms of trading strategies and market impact.https://www.emerald.com/insight/content/doi/10.1108/JDQS-12-2022-0027/full/pdfNational Pension ServiceInternal managementExternal managementInvestment strategyMarket impact |
| spellingShingle | Yunsung Eom Mincheol Woo Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management Seonmul yeongu National Pension Service Internal management External management Investment strategy Market impact |
| title | Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management |
| title_full | Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management |
| title_fullStr | Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management |
| title_full_unstemmed | Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management |
| title_short | Comparison of the trading strategies and market impact costs of the National Pension Service's internal and external management |
| title_sort | comparison of the trading strategies and market impact costs of the national pension service s internal and external management |
| topic | National Pension Service Internal management External management Investment strategy Market impact |
| url | https://www.emerald.com/insight/content/doi/10.1108/JDQS-12-2022-0027/full/pdf |
| work_keys_str_mv | AT yunsungeom comparisonofthetradingstrategiesandmarketimpactcostsofthenationalpensionservicesinternalandexternalmanagement AT mincheolwoo comparisonofthetradingstrategiesandmarketimpactcostsofthenationalpensionservicesinternalandexternalmanagement |