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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Amid the market turbulence triggered by U.S. tariff conflicts, South Korea’s National Pension Service (NPS) continues to hold a significant position in the top U.S. large-cap tech stocks known as the ‘Magnificent 7’ (M7). As of the end of April, NPS ranked fourth globally among public pension funds and sovereign wealth funds in terms of total assets under management (AUM) invested in the M7, with $30.8 billion.
However, the high concentration of assets in a handful of stocks poses substantial risks. GlobalSWF, an analysis agency for sovereign wealth funds and pension funds worldwide, recently issued warnings about excessive exposure to M7 stocks across major funds.
According to GlobalSWF on May 21, NPS ranks fourth in M7 AUM behind Norway’s sovereign wealth fund NBIM ($223.2 billion, 13% of total portfolio), Japan’s GPIF ($74.3 billion, 5%), and the U.S.’s CalPERS ($39.1 billion, 7%). NPS manages $30.8 billion in M7 stocks, representing 4% of its assets.
Despite record-breaking international travel passenger volumes in early 2025, U.S. market volatility driven by tariff disputes has led to negative returns across all M7 stocks through April this year. Tesla dropped 30.1%, Nvidia 18.9%, Amazon 15.9%, Alphabet 15.5%, Apple 15.1%, Meta and Microsoft 6.2% each.
The M7 market capitalization also shrank by 17% since the end of last year, dipping below $15 trillion. GlobalSWF estimates that sovereign wealth funds globally have incurred an average asset loss of approximately 1% due to this decline.
Norway’s NBIM, with 60% of its equities in the U.S. market and 13% invested in M7 stocks, is estimated to have posted a 1.6% loss in its equity portfolio in Q1 2025.
Meanwhile, some public funds prepared for the M7 downturn early on. For example, the Dutch pension fund APG sold all its holdings in Google, Meta, and Tesla after President Trump’s 2020 election. Canadian funds OTPP and CDPQ also scaled back most M7 positions.
Contrary to this cautious trend, South Korea’s NPS appears to have adopted a ‘buy-the-dip’ strategy. According to NPS’s Q1 2025 SEC filing, Apple was the largest net purchase, acquiring $333 million worth (1.5 million shares), followed by Microsoft ($205 million), Nvidia ($179 million), Amazon ($167 million), Meta ($102 million), Alphabet ($97 million), and Tesla ($44 million).
Similarly, Korea Investment Corporation (KIC) also increased holdings in most M7 stocks except Apple and Alphabet Class A shares during the same period.
However, large domestic investors like NPS have recently shown signs of diversification. NPS has increased exposure to content and media stocks less affected by tariff risks. They added $37 million in Warner Bros. Discovery shares, $16 million in Walt Disney, and $18 million in Netflix in Q1 2025.
Additionally, cryptocurrency-related stocks have gained attention. Robinhood and Interactive Brokers Group, classified as crypto-related, were among four new stocks added to NPS’s U.S. portfolio in Q1.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
