Japanese government panel suggests pensions shift to alternatives
A Japanese government-appointed advisory panel has suggested that the country's JPY160 trillion ($1.6 trillion) public pension system - which includes the JPY120 trillion Government Pension Investment Fund (GPIF) - reallocate a portion of its holdings from government bonds to higher-return assets such a real estate and private equity.
The panel outlined its ideas as part of a preliminary report; the final version is due out later this year.
While the report represents a significant step towards pension funds increasing their commitments to alternative assets, any change would still have to approved and implemented by the government.
An overhaul of public pension investment strategies began in June, with a review of investment strategies, risk management, and measures to increase returns from long-term stock investments. It is part of a series of bold policy changes brought in by Prime Minister Shinzo Abe in a bid to restore growth to the nation's economy.
In past, GPIF in particular has been singled out for its lackluster investment performance - around 67% of the fund's target portfolio is in domestic bonds, 11% in domestic stocks, 8% in foreign bonds, 9% in foreign stocks and 5% in short-term financial assets.
However, the pension fund has recently led the way in the push for greater allocation to alternative assets after announcing last November that it would conduct feasibility studies for possible future investments.
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