Japan’s GPIF to allow investing up to 31% of its assets in foreign bonds

Signage is displayed at the entrance to the Government Pension Investment Fund (GPIF) headquarters in Tokyo, Japan, on Friday, July 29, 2016. Photographer: Tomohiro Ohsumi/Bloomberg

Japan’s Government Pension Investment Fund will allow as much as 31% of its assets to be invested in foreign bonds, two sources familiar with the matter said, reflecting more leniency for the fund to overshoot its formal allocation target.

The world’s largest pension fund will raise its foreign bond allocation target to 25% from 15% in its new portfolio which is due to disclose later this month, Reuters previously reported.

The permissible range of deviation in foreign bonds from the allocation target will be extended to 6% from the current 4%, said the government sources, who declined to be identified because the plan has not been made public. That will boost the upper limit of investment in foreign bonds to 31% from 19%.

A spokeswoman for GPIF, which managed 169 trillion yen ($1.5 trillion) as of end-December, declined to comment.

Another 11 trillion yen would be poured into foreign bonds if the fund invests 25% in the asset, shows Reuters’ calculation based on the fund’s results as of end-June.

The fund halted disclosing the amount and ratio of investments in different asset classes from the second quarter last year, as it aimed to avoid affecting the market with such details ahead of the portfolio review.

While raising the foreign bonds allocation target, the fund will cut its domestic bond allocation target to 25% from 35%, the sources said.

The changes will mean that without deviations, the fund’s portfolio will be evenly split at 25% each across domestic and foreign stocks and domestic and foreign bonds.

In the current portfolio, the allocation targets are 25% each for domestic and foreign stocks, 35% for domestic bonds, and 15% for foreign bonds.

Japanese government earlier this week appointed Masataka Miyazono, a former Norinchukin Bank executive, as the new GPIF head, after Reuters reported his impending appointment.

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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