Japan fund reduces domestic bond weighting

The world’s largest investor, the ¥117,643 billion ($1.43 trillion) Government Pension Investment Fund of Japan (GPIF) has reduced its weighting to domestic bonds by more than 1 per cent, moving the money into short term assets.

At the end of September, the second quarter of the fund’s fiscal year, it still had a whopping 70 per cent invested in domestic bonds, but this was down from 71.1 per cent the quarter previous.

The domestic bond allocation has been as high as 72 per cent, but at the end of fiscal 2009 was a relatively low 67.54 per cent.

The allocation to international bonds (8.16 per cent) and international stocks (9.74 per cent) were also up slightly for the September 2010 quarter.

The fund returned 1.53 per cent for the second quarter, a vast improvement on its first quarter loss of -2.94 per cent.

Most of the fund’s assets are managed passively, and last financial year (ending March 31, 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.