Japan's GPIF raises its allocation target for foreign bonds to 25%

Japan’s Government Pension Investment Fund (GPIF) said on Tuesday it would raise its allocation target for foreign bonds to 25% from the current 15%, marking a shift from unprofitable domestic bonds to foreign assets.

The GPIF is world’s largest pension fund and managed 169 trillion yen ($1.5 trillion) worth of assets as of end-December. Its moves are closely watched by global financial markets because of its mammoth size.

Another 11 trillion yen ($101.46 billion) would be poured into foreign bonds if the fund invests 25% in the asset, according to Reuters’ calculation based on the fund’s results as of end-June.

The fund will also extend the permissible range of deviation from the foreign bonds allocation target to 6% from 4%, it said in a statement, pushing the upper limit of investment in the asset to 31% from 19%.

In contrast, the GPIF will lower the allocation target for domestic bonds to 25% from 35%, meaning its new portfolio will be evenly split at 25% each across domestic and foreign stocks and domestic and foreign bonds.

GPIF President Norihiro Takahashi will be replaced by a former Norinchukin Bank executive Masataka Miyazono on April 1.

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