Japan’s giant public pension fund said Tuesday its total assets swelled to a record ¥130.9 trillion as of Sept. 30, increasing by ¥3.62 trillion over the three months from July.
The Government Pension Investment Fund, the world’s largest institutional investor, also said the proportion invested in domestic bonds fell below 50 percent for the first time since it started to manage the pension fund at its own discretion in April 2001.
Prime Minister Shinzo Abe has urged the fund, supervised by the Ministry of Health, Labor and Welfare, to buy more risky assets to seek higher returns, aiming to ensure the long-term sustainability of Japan’s universal pension system.
During the July-September period, rising stock prices and the weaker yen produced an overall investment gain of 2.87 percent, the second straight quarter of increase, the GPIF said.
The market value of domestic stock investments increased ¥1.29 trillion and of foreign stock investments by ¥1.18 trillion. Investment in domestic debt generated a ¥315.2 billion profit and foreign bond investments produced ¥810.8 billion in gains, it said.
As of Sept. 30, domestic debt accounted for 49.61 percent of GPIF investments, Japanese stocks 18.23 percent, foreign stocks 17.41 percent and foreign bonds 12.14 percent, according to the fund.
In late October, the GPIF announced it would increase the proportion invested in Japanese stocks to 25 percent and in foreign debt to 15 percent, while slashing its holdings of domestic debt to 35 percent.
Before the announcement, the fund, which manages huge employee and national pension reserves, had apparently already moved to boost its stock purchases with pressure growing from Abe and Health, Labor and Welfare Minister Yasuhisa Shiozaki.
Shiozaki, a former Bank of Japan official well-versed in economic and financial market matters and a strong advocate of reforming the GPIF, was appointed welfare minister in the Cabinet reshuffle in early September.
Abe’s administration pledged in its economic growth strategy released in June to call on the GPIF to “swiftly” review its investment portfolio in consideration of economic and price conditions.
In the strategy, the government also asked the pension fund to overhaul its governance structure to promote transparency, as some observers have criticized the fact that the GPIF investment strategy is effectively decided by just the fund’s president.
On Tuesday, a working group of a welfare ministry panel proposed a council, similar to the BOJ’s Policy Board and composed of finance and investment experts, be created to decide how to manage the GPIF’s huge pension assets.
The panel is expected to conclude its deliberations by the end of this year, and the ministry is likely to seek to amend legislation to reflect its recommendations during the Diet session beginning early next year, government officials said.