China's NSSF posts 11.7% investment return for 2014

Investment income came to RMB142.4 billion ($22.9 billion) - compared to RMB68.6 billion in 2013 - including realized gains of RMB88.3 billion, according to the fund's annual report. The annualized investment return since the fund's inception in 2000 is 8.38%.

The NSSF, which is China's largest pension fund, saw its total assets under management rise 24% to RMB1.53 trillion. Of this, RMB130.5 billion, or 8.5%, was deployed overseas. There was an increase in the proportion of assets entrusted to third-party managers - 49.74%, up from 46.05% in 2013 - for a total of RMB763.8 billion. The remainder comprises direct investments.

NSSF has been investing in domestic private equity funds since 2004 and four years later won regulatory approval to deploy up to 10% of its assets in private equity. As of last year, it had made LP commitments to 19 PE and VC funds, including vehicles managed by the likes of Hony Capital and CDH Investments.

Towards the end of last year, the State Council launched a public consultation on proposed rules governing the NSSF. Recommendations included expanding the fund's investment program overseas, with reference made to fixed income, stocks and private equity.

Industry participants were encouraged by the move but cautioned that it hinges on further detailed guidance from Ministry of Finance and the Ministry of Human Resources & Social Security. It is unknown if and when these recommendations might crystallize into actual commitments.

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