World’s Largest Pension Boosts Foreign Holdings to Record High

Japan’s Government Pension Investment Fund bought $11.5 billion worth of foreign equities last quarter, bringing overseas holdings to an all-time high for the world’s largest pension fund.

In 2014, the fund raised its target allocation for foreign equities from 12 percent to 25 percent.

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The funds bought a net 1.3 trillion yen ($11.5 billion) of overseas securities, bringing their total to 59.5 trillion yen, and also added to investments in domestic equities, Bank of Japan data published Friday show. They offloaded a net 704.4 billion yen in Japanese government bonds, leaving them holding 51.8 trillion yen of such debt, the lowest total since the third quarter of 2004.

The shifts may reflect trading by smaller peers of the $1.2 trillion Government Pension Investment Fund, which decided last year to align their investment strategies with GPIF’s from October. The retirement managers’ stock buying also came after a third-quarter rout in equities eroded the value of shares they already held, taking them further from target allocations.

Pension funds for civil servants, local government officials and private school teachers, which managed about 30 trillion yen at the time, said a year ago they would adopt targets of 25 percent each for domestic and foreign equities, 35 percent for domestic bonds and 15 percent for overseas debt as of Oct. 1. GPIF doubled its equity allocation the previous year.

The GPIF oversees $1.2 trillion in assets.

Photo by Ville Miettinen via FLickr CC License