Government Pension Investment Fund, Tokyo, has been selling domestic government bonds as the number of people eligible for retirement payments increases, according to the president of the world’s largest pension fund by assets.
“Payouts are getting bigger than insurance revenue, so we need to sell Japanese government bonds to raise cash,” Takahiro Mitani, president of the ¥113.6 trillion ($1.45 trillion) fund, said Tuesday in an interview. “To boost returns, we may have to consider investing in new assets beyond conventional ones.”
The fund needs to raise about ¥8.87 trillion this fiscal year to pay pension benefits, Mr. Mitani said in an interview in April. As part of its effort to diversify assets and generate higher returns, GPIF recently started investing in emerging markets stocks.
GPIF is historically one of the biggest buyers of Japanese debt and held ¥71.9 trillion, or 63% of its assets, in domestic bonds as of March, according to the fund’s financial statement for the 2011 fiscal year. That compares with 13% in domestic stocks, 8.7% in foreign bonds and 11% in overseas equities.
The market environment may remain “favorable” for Japan’s debt over the next couple of years on prospects that the Bank of Japan will keep easing monetary policy to meet its 1%, according to Mr. Mitani.
Mr. Mitani also declined to say whether the fund’s performance since April is matching last year’s total return of 2.32%. “Our performance is not that good so far this year due to the yen’s strength and losses in domestic and overseas stocks,” he said.
