The recently released 2025 Annual Report of the National Social Security Fund shows a return on investment of 13.22%, the highest level since 2021, with investment gains reaching 390.672 billion yuan, a record high for a single year. While this stellar annual performance has attracted widespread attention, the fund's long-term track record deserves even closer examination.

Over more than two decades of operation, the National Social Security Fund (NSSF) has achieved an average annual return of 7.62%, with cumulative investment gains reaching 2.291679 trillion yuan - nearly 1.8 times the total fiscal allocations and stock contributions during the same period. In other words, the value created through long-term investment operations has exceeded the cumulative net fiscal injections, making investment appreciation a crucial source of fund accumulation.

Looking at the fund's annual returns, only three years in the past two decades saw negative book returns. Among the profitable years, eight achieved double-digit returns, with 2006 and 2007 recording exceptional gains of 29.01% and 43.19% respectively. Overall, the fund's two-decade practice provides a clear answer to navigating market cycles: a commitment to long-term, value-oriented investing.

Where the Strategy Begins

First, the long-term assessment framework provides strategic conviction. As a national strategic reserve for social security, the NSSF faces no significant short-term payout pressure, making it the most typical long-term capital source. Managers are evaluated over three-to-five-year cycles, reducing the noise of short-term market fluctuations and allowing them to position portfolios with patience, without being swayed by quarterly or annual price swings.

Second, diversified asset allocation balances risk and reward. The fund's investments span equities, private equity, fixed income products, and cash, with deep research into quality assets held for extended periods - some individual stock positions have been maintained for up to twenty years. According to Jin Zhuo, Deputy Director of the NSSF Council, the investment scope covers stocks, bonds, and other areas, forming a globalized, diversified, and dispersed allocation system. This structure provides the resilience to absorb short-term volatility while achieving relatively stable returns over the long horizon.

Professional Management and Disciplined Rebalancing

Third, the separation of "asset management" from "fund management" through professional delegation. The NSSF combines direct investment with commissioned management - as of end-2025, direct investment assets accounted for 26.81% and commissioned assets 73.19%. The Council handles top-level strategy and manager oversight, while stock selection, bond timing, and trade execution are largely performed by professional institutions. This model leverages the Council's macro-control strengths alongside market expertise.

Through years of practice, the NSSF has developed a three-tier allocation system: strategic asset allocation - setting target ratios and ranges as the anchor for medium-to-long-term management; tactical asset allocation - determining short-to-medium-term adjustments within the strategic framework based on market conditions; and asset rebalancing - maintaining discipline through position adjustments when allocations deviate from targets, locking in gains during market surges and adding positions during panic-driven declines to keep risk within reasonable bounds.

In 2025, the Council adopted a "steady progress through proactive measures" strategy, as stated in the report: "Actively conducting dynamic allocation, seizing opportunities during significant market pullbacks to increase equity positions, thereby supporting the healthy development of domestic capital markets while substantially enhancing investment returns."

Lessons for Individual Investors

While the NSSF's success stems from unique institutional advantages that cannot be replicated, its investment philosophy offers highly transferable lessons. Individual investors can draw from its approach in asset allocation, trading frequency, and investment methodology. On allocation, investors should structure equity, fixed income, and cash positions according to their risk tolerance - fixed income and cash provide a safety cushion and stable cash flow, while equities contribute long-term excess returns. On methodology, focus on fundamental analysis to uncover quality assets rather than chasing speculative themes, and stay committed to holding them over time. On trading frequency, cultivate a long-term mindset, abandon the short-term mentality of chasing gains and cutting losses, and avoid excessive trading.

Finally, embracing index tools such as broad-based ETFs can facilitate diversification, reduce the challenge of individual stock selection, and more reliably capture long-term market returns. The NSSF's investment track record demonstrates that value investing can indeed traverse market cycles.