Japan $80 billion public fund may shift funds to stocks from bonds: sources

Mon Aug 5, 2013 10:37pm EDT
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By Chikafumi Hodo

TOKYO (Reuters) - The pension fund for Japan's civil servants is considering changing its ultraconservative investment strategy to allow more of its $80 billion to go into stocks and less into domestic government bonds, people familiar with the matter said.

The move by the Federation of National Public Service Personnel Mutual Aid Associations, which covers 1.24 million active and retired public servants, follows a shift towards riskier investments by Japan's Government Pension Investment Fund, the world's biggest pension fund with $1.2 trillion in assets.

Prime Minister Shinzo Abe is pushing public funds to increase returns as part of measures to revive the economy's fortunes. His growth strategy seeks to mobilize Japan's enormous public savings, such as GPIF and the civil servants' pension fund.

The civil service federation's decision, expected around autumn, also shows the influence of the giant GPIF. Although the broader fund only tweaked its investment strategy, its enormous financial firepower means a potentially big slowdown in investors' purchases of government debt, which is now being bought in massive amounts by the Bank of Japan as part of its aggressive monetary easing.

"The federation is expected to change the portfolio model that is heavily weighted to domestic bonds," one of the sources told Reuters. "It is considering revising its investment strategy in a way to take more risks, especially after the change by GPIF."

The federation, which is supervised by the Ministry of Finance's budget bureau, reviews its portfolio every year in principal, said a fund official.

The public fund will take account of major market developments since late last year when it reviews its portfolio, the official said, declining to provide details as the content of the review could be sensitive for financial markets.


A pedestrian holding an umbrella walks past a stock quotation board displaying various stock prices outside a brokerage in Tokyo July 29, 2013. REUTERS/Yuya Shino