Japan’s Giant Pension Fund GPIF Decides To Increase The Foreign Bond Allocation

The world’s largest pension fund in Japan, Government pension Investment Fund (GPIF), has announced the increase of foreign bond allocation from 15% to 25%. It was revealed on Monday that Japan will appoint a former Norinchukin Bank executive as the new head of Government Pension Investment Fund (GPIF).

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Previously, the Nikkei newspaper first revealed this news. Japan giant pension fund decrease the domestic bond ratio and injected the cut in the foreign bond. Japanese Giant has not commented yet.

The change in asset allocation will be announced by the mammoth after it was examined by a government panel on March 30. Domestic bonds will be reduced to 25% from 35%.

According to Nikkei, the allocation target for domestic and foreign stocks will be 25% and for domestic bonds it is 35% and 15% for foreign bonds. According to these changes, the portfolio target will equally be divided between domestic and foreign stocks and domestic and foreign bonds.

In 2014, Prime Minister Shinzo Abe promote a risk-taking approach which results in cutting reliance on domestic bonds and increasing the weightage of riskier bonds. Masataka Miyazono is the new head of Government Pension Investment Funds (GPIF).

Government Pension Investment funds are the world’s largest investment pension fund which is closely watched by global financial markets because of its large size.

The new GPIF’s head Miyazono will replace the current president Norihiro Takahashi who will be scheduled to retire at the end of March. Miyazono previously works as the president at agriculture lender Norinchukin Bank.

Norinchukin is also the largest bank in Japan and the world’s market. Recently, GPIF also partnered with KfW (Kreditanstalt für Wiederaufbau) to promote green bonds.

Government Pension Investment Fund manages and invests the Reserve Funds of the Government Pension Plans entrusted by the Minister of Health, Labour and Welfare, following the provisions of the Employees’ Pension Insurance Act (Law No.115 of 1954) and the National Pension Act (Law No.141 of 1959). GPIF also contributes to the financial stability of both Plans by remitting profits of investment to the Special Accounts for the Government Pension Plans.