The Government Pension Investment Fund, the world's largest pool of retirement savings, cut domestic bond holdings to the lowest level since the fund's inception in 2006 and said it will invest in infrastructure.
Japanese bonds accounted for 55 percent of the fund's portfolio at the end of the quarter ended December, shrinking from 58 percent in the previous period and the smallest share since GPIF was established in its current form in April 2006. The fund will put as much as $2.7 billion into infrastructure over the next five years, it said at a briefing in Tokyo last week. Assets swelled to a record ¥128.6 trillion as of Dec. 31 as the fund earned a 4.7 percent quarterly return, GPIF said in a separate statement.
"It's a fact that GPIF needs to take risk to some degree in order to raise returns," said Kenji Shiomura, a Tokyo-based senior strategist at Daiwa Securities Group Inc., Japan's second-largest brokerage. The infrastructure investment "is a good thing. Shifting from its emphasis on Japanese bonds and diversifying into various assets will reduce risk. I think others will follow GPIF's move."