World's Biggest Pension Fund to Hedge Yen, Nikkei Reports

  • Protection to focus mainly on dollar, euro assets, GPIF says
  • Norihiro Takahashi, fund's new president, speaks in interview

Norihiro Takahashi.

Photographer: Kiyoshi Ota/Bloomberg

Japan’s $1.3 trillion pension fund will start currency hedging to protect its foreign assets against an appreciating yen, the Nikkei newspaper reported.

QuickTake Japan’s Pension War

The Government Pension Investment Fund is looking to hedge dollar and euro-based investments, President Norihiro Takahashi said in an interview, according to the Nikkei. Takahashi, who took the role at the start of this month, said that while he doesn’t rule out protecting emerging-market assets, the fund will concentrate on major currencies because of the size of positions denominated in them.

GPIF boosted foreign stocks and bonds in 2014 when the yen was tumbling and now has 36 percent of holdings in such assets, which are being hurt after the currency gained more than 8 percent against the dollar this year. A stronger yen weighs on the value of overseas investments when repatriated. GPIF came under criticism in the past from a member of its own investment committee for not protecting against currency risk.

The yen rose 0.2 percent to 110.99 per dollar after gaining 0.5 percent on Monday.

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