Summary of Key Highlights
The National Social Security Fund (NSSF) delivered impressive results for the year 2025: its annual investment return reached 390.672 billion yuan (a record high), with a yield of 13.22% (the highest in the past five years). Over the past 25 years, the average annual yield has been 7.62%, resulting in a cumulative profit of 2.29 trillion yuan. Meanwhile, the local pension fund achieved a yield of 5.76% for the year 2025. In the second quarter of 2026, the NSF increased its holdings in 179 individual stocks, showing a particular preference for the hardware equipment and non-ferrous metals sectors.
Detailed Analysis
1. **2025 Performance: Highest Annual Return and Outperformance of Inflation**
The NSF’s performance in 2025 was outstanding:
- Record Annual Return: The 390.672 billion yuan in earnings exceeded the historical peak of 2020 by 12 billion yuan, and the yield of 13.22% was the highest since 2021. This was due to the strong performance of the A-share market last year, with the Shanghai Composite Index rising by 18.4% and the ChiNext index by nearly 50%. The NSF seized these opportunities.
- Solid Long-Term Performance: With an average annual return of 7.62% over 25 years, this means that an initial investment of 100 yuan could grow to more than 700 yuan after 25 years (based on compound interest), outperforming inflation, which typically ranges between 2% and 3% annually, and helping to build a solid foundation for future pension payments.
2. **The Secret to Success: Three Strategic Approaches**
The NSF does not rely on passive investment; instead, it takes an active role:
- Stabilizing Growth through Investment: Despite market fluctuations, the NSF adopted an aggressive strategy, such as increasing its stock holdings during the A-share market downturn last year, which helped stabilize the market and generated additional profits.
- Aligning with National Strategies: The NSF increased its investment in manufacturing sectors (e.g., new energy and high-end manufacturing) to support the real economy and benefit from industry growth.
- Dynamic Position Adjustment: The NSF closely monitors market changes, adjusting its holdings as needed to avoid holding onto underperforming assets.
3. **Asset Allocation: Professional Management and Increased Overseas Investments**
How is the NSF’s money managed?
- Mainly Managed by Professionals: Of its total assets of 3.81 trillion yuan, 73% (2.79 trillion yuan) are managed by professional fund companies, leaving only 27% invested directly by the NSF. This approach ensures better investment decisions.
- Increasing Overseas Investments: The proportion of overseas investments rose from 13% to 15% last year, aiming to diversify risks. For example, when the domestic market declines, overseas assets may perform well, helping to balance overall returns.
- Sources of Funds: The NSF’s funds come from government appropriations, lottery proceeds, and the sale or transfer of state-owned shares, totaling 1.28 trillion yuan, which serves as the initial capital provided by the state.
4. **Local Pension Fund: Prudent Approach with More Conservative Returns**
Compared to the NSF, the local pension fund adopts a more cautious approach:
- Yield of 5.76% for 2025: Although lower than the NSF’s, it prioritizes stability, as the local pension fund is responsible for directly paying retirees and cannot afford significant risks.
- Cumulative Profit of 554.4 Billion Yuan: Since its inception in 2016, the average annual return has been 5.14%, sufficient to cover daily expenses and inflation, ensuring timely pension payments.
5. **Latest Holdings: Preference for Hardware Equipment and Non-Ferrous Metals**
The NSF’s holdings in the second quarter of 2026 reveal its investment preferences:
- New Heavy Holdings in 179 Stocks: Nine of the top 20 holdings are in the hardware equipment sector (e.g., Sanhuan Group, TCL Technology), indicating the NSF’s optimism about the future of technology manufacturing. Non-ferrous metals stocks like Zijin Mining were also significantly increased, possibly reflecting expectations of rising commodity prices.
- Reductions and Exits from Certain Stocks: Holdings in companies like Siyuan Electric and Dongfang Securities were reduced, suggesting that the NSF is adjusting its portfolio to focus on more promising sectors.
- Focus on Large-Cap Blue Chips: Bank stocks such as Agricultural Bank of China and Industrial and Commercial Bank of China remain key holdings, providing stable dividends and a steady cash flow.
Conclusion
The NSF’s success in 2025 is a result of both market conditions and proactive investment strategies. It serves as a vital source of pension funds for the public and acts as a stabilizer for the capital market, generating profits while supporting the real economy. Moving forward, as the economy continues to transform, the NSF is likely to increase its investment in technology and manufacturing sectors, aiming to enhance returns and contribute to national development.