Japan's $1.1 trillion Pension Fund to increase infra investments
According to sources, Japan’s 135 trillion yen ($1.1 trillion) Government Pension Investment Fund is building up its alternative investment department after announcing that it expects to increase its infrastructure investments more than 10-fold.
The pension fund is willing to secure higher returns than low-yielding bonds. And for that, the fund has boosted staff in its alternative investment section, formed last year, to five people, with more hires expected.
The context is that number of retirees in Japan is currently growing and Prime Minister Shinzo Abe’s government is trying to spur inflation, which decreases the fixed returns offered by bonds. Last month, the fund announced it had lost 5.6 percent in value last quarter, which was its worst quarterly result since 2008.
As of September 2015, the fund had 53 of the investments in bonds. The fund only held 0.05 percent of its assets in alternative assets at the time.
GPIF teamed up in February 2014 with the Ontario Municipal Employees Retirement System (OMERS) and the Development Bank of Japan to jointly invest up to 280 billion yen over the next five in infrastructure in developed countries.
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