Japan Pensions Follow GPIF to Stocks, Away From Bonds

Japan’s mid-sized pension funds on Friday announced their intentions to mimic the portfolio shift of the giant Government Pension Investment Fund.

The GPIF is in the midst of a reallocation that involved cutting bond exposure and loading up on foreign and domestic stocks.

The three smaller funds following suit are: the Promotion and Mutual Aid Corporation for Private Schools of Japan, the Pension Fund Association for Local Government Officials, and the Federation of National Public Service Personnel Mutual Aid Associations.

From the Wall Street Journal:

The three smaller pensions’ decision to use the GPIF’s portfolio as a model reflects a 2012 law that mandates the consolidation of the nation’s employee pension system by October 2015. Though the funds will align their investment strategies, they will still be organizationally independent, welfare minister Yasuhisa Shiozaki said earlier this month.

The three smaller funds also hold assets that the GPIF doesn’t have, including real estate and educational and home loans to members. They will treat any such assets as either stocks or bonds, the statement said.

Data indicate the three smaller pensions have already started to shift their portfolios. Trust banks, which manage money for pensions, sold a net ¥389.1 billion of super-long Japanese government bonds in February, the sixth consecutive month of net selling, according to data released Friday by the Japan Securities Dealers Associations. Pensions are big investors in super-long JGBs as they invest over a long time horizon.

The three smaller funds manage $249 billion in pension assets collectively.

Photo by Ville Miettinen via FLickr CC License