World’s Largest Pension to Invest in Emerging Stocks
September 30, 2011 (PLANSPONSOR.com) – The world’s largest public pension fund, in Japan, will start investing in emerging market stocks by the end of the year, reports Bloomberg.
Japan’s Government Pension Investment Fund (GPIF), which oversees 114 trillion yen ($1.5 trillion), is in the last stage of deciding the managers who will handle the investments, said Takahiro Mitani, President of GPIF. Bloomberg states the investments will be focused on markets included in the MSCI Emerging Markets Index.
The fund, in which the majority of investments is in domestic bonds, is seeking better returns to cover payments in the world’s most rapidly aging society.
GPIF will probably remain a net seller in the fiscal year starting April 2012 to cover pension payments, Mitani said, according to the news report. The fund will sell fewer Japanese bonds this fiscal year from its portfolio than it sold last year as bonds reach maturity. It sold 4.7 trillion yen worth of bonds in the fiscal year ended March 31.
Under a five-year investment plan set up in March 2010, GPIF will allocate about two-thirds of its assets to domestic bonds, 11% to Japanese stocks, 8% to foreign bonds, 9% to overseas equities, and 5% to short-term assets.
GPIF has commissioned a study on alternative assets, such as hedge funds, real estate, and private equity, as it seeks investments that will not be correlated to the fund’s traditional holdings of bonds and equities, Mitani added.