(February 21, 2013) – Japan’s Government Pension Investment Fund (GPIF), which oversees roughly ¥107 trillion ($1.16 trillion), is considering changes to its asset allocation, according to the Nikkei.
The fund may boost its exposure to domestic stock, marking its first portfolio change in years, the fund’s President Takahiro Mitani recently indicated. “Some committee members may argue that stocks make a good investment option,” he said, and predicted a sustained bull market for Japanese public equities.
Beginning this spring, GPIF’s investment committee will deliberate shaking up the portfolio. Changes could slowly start being implemented in the second half of the 2013 fiscal year.
In July, GPIF took its first step into the emerging market space, selecting six asset managers to make investments in the asset class. The new allocation was small compared with the size of the fund as a whole, but marked Mitani’s willingness the push outside the pension’s traditional comfort zone of Japanese government bonds.
As of the close of September 2012, the latest data for which data’s available, GPIF held 64.4% of its assets in domestic debt, and about equal parts in Japanese and foreign stocks (11.46% and 11.73%, respectively). The report gave no indication of where the proposed additional allocation to domestic equities would be drawn from.
Notably, Japanese stocks were the worst-performing aspect of GPIF’s enormous portfolio in the second quarter of 2012 (July through September). The fund as a whole gained 0.49% over those three months, while its holdings of domestic public equities lost 3.43%.
Related Profile: Takahiro Mitani, President of Japan’s Government Pension Investment Fund