BIG CHANGES: World’s Largest Pension Fund Shifts Allocation

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Japan’s Government Pension Investment Fund (GPIF), the steward of 67 million retirement participants, is embarking on a dramatic shift toward equities. The pension giant is cutting its allocation to domestic bonds, specifically Japanese government bonds (JGBs). Domestic bonds will go from 60% to 35%, a major change in allocation, over an unspecified period of time. The GPIF has been a key buyer of JGBs, paying into a ballooning pool of public debt. For the first time ever, the GPIF could be 50% weighted to public equities. With the Bank of Japan surprisingly easing monetary policy and the GPIF allocating toward stocks, Japanese equities are sure to get a short-term boost.

The GPIF uses both active, passive and smart beta managers in equities. The strategy shift is drawing the attention of global fund managers.

View Institutional Investor Profile of GPIF

GPIF President Takahiro Mitani told reporters, “The change in our investment stance is to face changes in the economy as it exits deflation.”

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