Japan Pension’s Portfolio Overhaul Pays Dividends With Record Quarter


A shift into riskier investments has paid off for Japan’s pension fund – at least in the fourth quarter of 2014.

In late 2014, Japan’s Government Pension Investment Fund (GPIF) began a portfolio overhaul that involved shifting a higher percentage of assets away from bonds and into stocks.

The well-publicized shift proved to be a boon for the Tokyo stock market, and the pension fund rode that wave as the fourth quarter of 2014 proved to be the second-best quarter in the fund’s history.

From the Wall Street Journal:

The GPIF on Friday reported a ¥6.6 trillion ($55 billion) investment profit in the December-ended quarter, a return of 5.2% compared with the previous quarter. The fund generated a return of 2.9% in the third quarter.

The value of the its assets under management reached ¥137 trillion, the highest since the fund was created in 2001.

GPIF officials don’t reveal the specifics of their investment activities, but figures released Friday showed the fund has likely sold about ¥6.5 trillion of Japanese government bonds during the quarter while buying roughly ¥2 trillion each of overseas and domestic equities, according to a Wall Street Journal analysis.


At the end of October, the GPIF announced major changes to its asset allocations, cutting its intended weighting to domestic bonds to 35% from 60%. It raised the allocation to foreign and domestic equities to 25% each, from 12% each, and to foreign bonds to 15% from 11%.

The fund is still only halfway toward achieving these targets.

The GPIF manages $1.1 trillion in pension assets and is the largest pension fund in the world.


Photo by Ville Miettinen via Flickr CC License

Japan Pension Puts Governance Overhaul on Hold, For Now


A governance overhaul at the world’s largest pension fund was put on hold this week.

Officials at Japan’s Government Pension Investment Fund (GPIF) had been planning a major governance overhaul, including the creation of a new board to oversee the fund’s investments.

But that proposal and others have been put on the backburner, as Prime Minister Shinzo Abe approved a bill that will make governance changes on a much smaller scale.

More from the Wall Street Journal:

Minister of health, labor and welfare Yasuhisa Shiozaki, whose ministry has purview over the fund, has advocated installing a governing board that would oversee GPIF’s investments and ensure independence from political interference. But his idea was at odds with the overhaul process envisioned by others in the Abe administration. They believed a Shiozaki-style plan would be difficult to push through parliament in its current session, which ends in June, and they wanted to pursue as many changes as possible without a major new law.

Chilly relations between Mr. Shiozaki and the GPIF’s new chief investment officer, Hiromichi Mizuno, have also hindered the Abe government’s ability to build consensus.

On Tuesday, Mr. Abe’s cabinet effectively settled the dispute for now by approving a more modest bill without the Shiozaki proposals. The bill allows the fund to keep its headquarters in Tokyo, overturning a previous measure requiring a move, and gives legal imprimatur to the position of chief investment officer. Mr. Mizuno, a former private-equity executive in London, took the post in January. The smaller bill now goes to parliament for final passage.

Welfare Minister Shiozaki said he would continue to push for larger governance changes.

The GPIF manages $1.1 trillion in pension assets.


Photo by Ville Miettinen via Flickr CC License