According to a report from the Wall Street Journal,"Japan's Government Pension Investment Fund $1.2 trillion , the world's biggest pool of pension money, is under the control of the health ministry, resulting in an ultraconservative investment menu of stocks and bonds. The fund is also bound by strict rules that have limited direct investment to Japanese government bonds, which are currently the lowest-yielding sovereign debt in the world".
'"Since July, a government-appointed panel of seven finance and business experts has been drawing up recommendations for a major revamp to get returns up. Although the panel won't make specific asset-allocation suggestions, the panel's report, which may come out as early as Nov. 20, is seen as the first step in steering the GPIF's bond-heavy portfolio into a much wider range of investments, potentially unleashing a flood of cash into global markets.
'"Since July, a government-appointed panel of seven finance and business experts has been drawing up recommendations for a major revamp to get returns up. Although the panel won't make specific asset-allocation suggestions, the panel's report, which may come out as early as Nov. 20, is seen as the first step in steering the GPIF's bond-heavy portfolio into a much wider range of investments, potentially unleashing a flood of cash into global markets.
"The GPIF making decisions would mean many other pension funds following suit and adopting similar allocations. There would be a big impact for the asset classes into which funds flow," said Takashi Hiratsuka, a trading group leader in the asset management of Resona Bank, a custodian of about ¥17 trillion ($170 billion) in assets.
Just a one percentage point move in the GPIF's allocation to domestic stocks, for instance, could send ¥1.2 trillion into the market.
Freeing the GPIF from the control of the health ministry would let the fund set its own budget, pay more for outside fund management and attract talent from brokerage firms and asset-management companies with higher pay.
Instead of targeting a set investment return, as the fund does now, the panel would likely advise the GPIF to decide how much risk it can take, and then try for the highest returns it can get".
"We are trying to make [our proposals] more concrete," panel chairman and University of Tokyo professor Takatoshi Ito told The Wall Street Journal in a Thursday interview. "Concrete in portfolio, concrete in governance, and concrete in a road map."
