(Bloomberg) -- The world’s biggest pension fund will raise its asset allocation in foreign bonds as continued monetary easing in Japan keeps domestic yields stuck below 0%, Nikkei Asian Review reported.
Japan’s Government Pension Investment Fund, with assets totaling 168.9 trillion ($1.5 trillion), will increase its allocation of foreign bonds to 25% from 10%, Nikkei said, without saying where it got the information from. Domestic and foreign stocks will each continue to make up 25% of its revamped portfolio, it said.
The strategy overhaul, heralded in an earlier announcement in October when it gave itself more leeway to buy foreign debt, comes after bond yields tumbled to record lows globally. With the Federal Reserve saying Monday that it would buy unlimited amount of bonds and more central banks embarking on quantitative easing, GPIF may find it hard to deploy its funds.
Should approval be granted from the Social Security Council, GPIF will announce its changes on March 31. Japanese bonds currently account for 35% of its portfolio.
The move toward overseas bonds contrasts with its strategy revamp in 2014, when it boosted stocks and cut debt with the assumption that rising prices would erode Japan’s low-yielding debt. While the previous strategy helped the GPIF generate consecutive years of gains, the fund suffered a record 14.8 trillion yen loss during the fourth quarter of 2018 amid a global equity rout.
A GPIF representative wasn’t immediately reachable for comment.
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