GPIF considers quota for roads, real estate, private equity

JIJI

The Government Pension Investment Fund plans to create a new portfolio category for investments in assets such as infrastructure, real estate and private equity, sources said.

The category for so-called alternative investments in unconventional assets is expected to be finalized this autumn, when the pension fund releases its new portfolio allocation, the sources said Monday.

GPIF is in the final stages of deciding the new quota’s size but plans it to be the portfolio’s smallest, possibly representing around 5 percent of total assets, the sources said.

GPIF is one of the world’s largest pension funds. It has around ¥126 trillion in assets under management, which means more than ¥5 trillion would likely be allocated to the new category.

It will be the first time GPIF has invested in private equity, although it began investing in infrastructure in February.

GPIF currently has five categories of investments: domestic bonds, domestic stocks, foreign bonds, foreign stocks and short-term assets. Infrastructure investments are held within the foreign bond category.

The short-term assets category currently accounts for 5 percent of total assets and is a category that GPIF is considering excluding from its new portfolio.

GPIF found it necessary to review its portfolio classification to diversify its investments.

Prime Minister Shinzo Abe regards reform of GPIF’s asset management as one of the pillars of his administration’s growth strategy.

Last November, a panel of government-appointed experts on public pension money management recommended that GPIF consider alternative investments.