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Japanese fund pours assets into equities market

The world’s largest fund, the Government Pension Investment Fund, Japan, has substantially increased its allocation to international equities in the past year, moving more than $31.8 billion of assets into offshore equities in the year to June.

The fund, which had total assets of 113,746.9 billion yen ($1,482.97 billion) at the end of June 2011, has increased its offshore equities allocation from 9.11 per cent to 11.26 per cent in the past year.

The fund’s allocation to domestic equities also increased slightly, as did its allocation to short-term assets.

In that time domestic bonds have decreased by 4.73 per cent to 66.35 per cent. The allocation to bonds has been as high as 72 per cent of the fund in the past, but was 71.08 per cent in June 2010.

For the first quarter of the 2011 fiscal year (March to June) the fund returned 0.21 per cent, a vast improvement on the overall 2010 fiscal-year return, which was -0.25 per cent, or an investment loss of $3.9 billion.

Most of the fund’s assets are managed passively, and in the financial year ending March 31, 2009, it reduced its weighting to actively-managed international equities, widening the number of service providers at the same time.

Overall the fund employs more than 80 funds managers.


Government Pension Investment Fund, Japan asset allocation

Asset classes June 2010 June 2011
Domestic bonds 71.08% 66.35%
Domestic stocks 10.87% 11.55%
International bonds 8.03% 8.37%
International stocks 9.11% 11.26%
Short-term assets 0.91% 2.47%


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