South Korea's National Pension Service (NPS), manager of the world's third-largest public pension fund, will continue to gradually increase its target investment in overseas and alternative assets, the welfare ministry said.

The NPS will invest 55% of its total assets in stocks, 30% in bonds and 15% in alternative assets by 2028, the ministry said in a statement released on Wednesday.

Its five-year investment target ratios, decided by the representative panel that governs the fund's investment policies, remained the same as the ones set last year for the period to 2027.

As of the end of March, the NPS held 42.6% of its total 953.2 trillion won ($721.61 billion) in assets in stocks, 40.8% in bonds and 16.0% in alternative assets. The recent spike in investment in alternative assets was due to sharp falls in stock and bond prices last year, which tumbled on global monetary tightening.

By the end of 2024, the fund aims to allocate 33% of its assets in overseas stocks and 14.2% in alternative assets, compared with the 2023 targets of 30.3% and 13.8%, respectively, while keeping overseas bonds flat at 8% and cutting domestic investments.

The panel in its annual review also raised the fund's investment return target for the next five years to 5.6% from 5.4% set for the end of 2027, according to the ministry.

"The decision on the targets reflected the need for active investment during the fund's growing period as well as possible impact on financial markets," it said.

The statement was released after a meeting that takes place every May to review the fund's mid-term investment strategies and portfolios.

It came two months after South Korean President Yoon Suk Yeol's order to prepare "extraordinary measures" to improve the fund's earnings.

With the country's population ageing rapidly, the fund is expected to be depleted by 2055. It has been actively expanding investment in risky and overseas assets for higher returns. (Reporting by Jihoon Lee; editing by Toby Chopra, Jason Neely and Raju Gopalakrishnan)