Japan’s GPIF Explores Incorporating Cryptocurrency Into Its Portfolio

Japan’s Government Penson Investment Fund, the largest pension fund in the world with $1.5 trillion in assets, has historically been alternatives shy, allocating roughly one-quarter of its portfolio to each of domestic bonds, foreign bonds, domestic equities and foreign equities, as of December 31, 2023. That left just 1.53% of its assets for alternatives.

The fund is now looking for insights on other asset classes, however. The GPIF issued a request for information on illiquid assets like infrastructure, real estate and private equity and measurement methods to measure expected return, risk, performance assessment and ESG assessment. The information supplied can take the form of academic papers and other research, including basic information on illiquid assets.

The GPIF also requested information on illiquid assets not currently under management by the fund, which include forests, farmland, gold and cryptocurrency, as well as investment philosophies on these asset classes and how they could be incorporated into the portfolio of pension funds.

The fund held 1.53% of its assets, nearly $23 billion, in alternative investments at the end of 2023. Overall, the GPIF invests in bonds, stocks, real estate, infrastructure and private equity.

The request for information is aligned with the GPIF’s annual plan, which states the fund wants to diversify its investment and risk management, foster ESG and sustainability investing and realize sustainable development goals, according to the fund’s RFI.

Very few pension funds have seriously explored exposure to cryptocurrencies, such as bitcoin. In February, the Japanese legislature advanced amendments to the Industrial Competitiveness Enhancement Act that would permit limited partnership funds to acquire crypto assets.

The deadline to submit information to the GPIF is April 19 at 5:00 p.m. Japan Standard Time.