Japan Government Pension Fund Says Holdings Close to New Targets

Japan’s Government Pension Investment Fund, the world’s No. 1 manager of retirement savings, doesn’t need to adjust its holdings to meet new asset allocation targets announced earlier this month, according to President Takahiro Mitani.

GPIF, which oversaw about 112 trillion yen ($1.15 trillion) at Dec. 31, won’t be discussing further changes to its portfolio this year, Mitani said in an interview in Tokyo today. The fund said June 7 it is cutting its target allocation for Japanese government bonds to 60 percent from 67 percent, while the weight of foreign and local shares will rise to 12 percent each, from 9 percent and 11 percent respectively.

The GPIF, which didn’t alter the structure of its holdings during the worst global financial crisis in 80 years or in response to Japan’s 2011 earthquake and nuclear disaster, is making changes as Prime Minister Shinzo Abe and the central bank pledge to achieve 2 percent inflation in two years, which will erode the value of domestic bond holdings. The target allocations announced this month are close to what the fund already holds, Mitani said.

“We don’t have to make major changes,” 64-year-old Mitani said. “When there are big changes in the market, we are supposed to discuss if any changes are needed. We plan to keep with our current portfolio for another year and nine months.’’

Benchmark 10-year government bond yields have swung from an all-time low of 0.315 percent to as much as 1 percent since the Bank of Japan announced in April a plan to double monthly debt purchases to more than 7 trillion yen. The yield rose four basis points to 0.89 percent today.

Yen Retreat

The yen slid to a more than four-year low of 103.74 per dollar last month in the wake of the BOJ’s announcement. The currency has since pared those losses, trading at 97.78 as of 3:26 p.m. in Tokyo.

The shift toward higher-yielding assets comes as the GPIF is required to fund retirements in the world’s most elderly population.

The BOJ is aiming to double the monetary base by the end of next year in pursuit of a 2 percent inflation goal, while Abe has promised government spending, freer trade and a more flexible labor market to revive the economy.

The Topix index, the nation’s broadest equity measure, rallied 77 percent from Nov. 14, when elections were announced that brought Abe to power, through May 22. Markets plunged on May 23 after yields on government bonds touched 1 percent.

Declines deepened after Abe said on June 5 that a legislative campaign to loosen rules on businesses, the so-called ‘‘third arrow” of his economic plan, won’t begin for months. The Topix climbed 0.7 percent to 1099.40 today, 14 percent below the May 22 peak.

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