Funds: Japan State Pension Fund Will Trim its Investments

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Funds: Japan State Pension Fund Will Trim its Investments

The International Herald Tribune

March 23, 2004

Japan state pension fund will trim its investments

The state pension fund in Japan will invest ¥5.8 trillion, or $54.3 billion, of new money in financial markets in the fiscal year that starts April 1 - less than half the amount invested in the current year - with the bulk going into domestic bonds, according to plans announced Monday.

The Ministry of Health, Labor and Welfare did not provide a breakdown of investment plans, but a senior official said the priority would be on domestic bonds after the rise in share prices over the past year had made the fund overweight in equities.

The Government Pension Investment Fund's new investment money for the coming year will be less than half its planned investment of ¥12.1 trillion in the current year, as a bigger part of the fund's income had to be used to underwrite government agency bonds.

As of the end of December, the fund managed about ¥44 trillion of assets in financial markets. Of that total, ¥22.8 trillion, or about 52 percent of the total, was in Japanese bonds.

The fund's investment strategy follows a model portfolio designed by an advisory panel to the ministry, which is made up of mainly market experts and academics.

The model calls for the fund to allocate 16 percent to 21 percent this year to Japanese equities and 15 percent to 20 percent next year. As of December, however, the fund had ¥10.5 trillion in domestic shares, or about 24 percent of its total assets, as the value of its stock portfolio rose with a rebound in Japanese stocks. Under the model recommendation, the fund gradually will trim its domestic stock weighting to about 12 percent in 2009 from around 25 percent currently.