The Social Security Council Pension Group of Japan’s Ministry of Health, Labor and Welfare said it will study whether the ¥135.1 trillion ($1.1 trillion) Government Pension Investment Fund should be allowed to invest directly in both publicly listed equities and alternatives, such as private equity, infrastructure and real estate.
The current regulatory structure that the GPIF operates under requires the fund to rely on external managers for its roughly ¥58 trillion in combined allocations to domestic and international equities. Likewise, the fund cannot currently invest as a limited partner in a GP-LP fund structure.
A summary of the pension group’s GPIF deliberations, which appeared on the Health, Labor and Welfare website on Tuesday, noted in-house capabilities have been central to the push by large public pension funds overseas to increasingly diversify their investment portfolios in recent years.
The summary noted that allowing the GPIF greater latitude to invest directly would pave the way for a reduction in the fees required for managing the portfolio. Moreover, for alternatives investments, the summary noted GPIF’s ability to become a “player” — directly obtaining information on potential investments could allow the fund to invest more effectively.
A spokesman for the ministry declined to speculate when deliberations could conclude and proposed changes implemented.