July 18 (Bloomberg) -- South Korea’s state pension fund, the nation’s biggest investor, plans to double its international assets within the next six years by investing in the so-called BRIC nations and other Asian countries.

“International investments currently account for a small part of our investment strategy, but international investments will be critical going forward,” National Pension Service manager Kim Seon Jung said yesterday in New York.

Foreign investments may jump to 15 percent of the world’s fifth-largest pension fund’s $204.7 billion in assets under management by 2015, up from 7.4 percent, he said.

Kim and Jeon Jae Hee, who oversees the state pension fund and is the minister of Health, Welfare and Family Affairs, were in New York to attend an investors conference and brief asset managers about the fund’s overseas investment strategy.

“We need to boost returns in order to secure the long-term financial stability of the fund,” said Jeon.

The fund plans to invest more of its assets in Brazil, Russia, India and China to tap into faster economic growth in those emerging markets. China said this week that its gross domestic product grew 7.9 percent in the second quarter, becoming the first of the major economies to rebound from the global recession.

The MSCI Emerging Markets Index of equities in 22 countries has climbed about 38 percent this year as commodities that sustain developing economies rose. That compares with a 6.8 percent gain for the MSCI World Index of developed markets.

Fund Assets

The fund had about $204.7 billion of assets at the end of June, of which 76.8 percent was invested in local bonds and 3.8 percent in overseas debt. Domestic stocks accounted for 12.1 percent of assets, while overseas equities were 3 percent. The state-run fund, which was set up in 1988 and covers private- sector employees and those who are self-employed, expects assets to grow to 424 trillion won ($337 billion) by 2014, according to the ministry.

The fund is also moving away from foreign investments in fixed income in favor of alternative energy, infrastructure and commercial real estate, Kim said. It’s also investing in exchange traded funds, he said.

South Korea should take more economic stimulus measures to offset the effects of the global recession, said Jeon.

The fund is watching for signs of a U.S. economic recovery “with great interest,” she said.

The ministry said May 29 the fund will cut its weighting of U.S. Treasuries and diversify its overseas portfolio in bonds such as corporate bonds. The reduction in the weighting of Treasuries doesn’t mean the fund will sell its holdings because its fund size is expected to grow, it said in May.

“Fifty-five percent of our overseas investment goes to the U.S. but we’re trying to diversify this because we think that we should hedge risks and try to boost profitability and return,” Jeon said in an interview. “In the mid- to long-term, it does not mean we will sell U.S. Treasuries that we now have suddenly, and it does not mean there will be a sudden adjustment to our portfolio.”

To contact the reporter on this story: Emily Schmall in New York at eschmall@bloomberg.net.

Last Updated: July 18, 2009 00:00 EDT