Japan’s Number Two Pension Fund to Post Best Returns in 20 Years

Japan’s second-largest pension fund said it expects to post the best returns since 2001 on the back of the global equity market’s rally and is looking to expand sustainable investing.

Returns likely exceeded 20% in the the year ended March, said Shigemune Sato, the director-general of the fund management department at the Pension Fund Association for Local Government Officials. The fund, known as Chikyoren, tracks the portfolio of Japan’s Government Pension Investment Fund, the world’s largest pension pot, and is scheduled to announce results on July 2.

Japan’s Number Two Pension Fund to Post Best Returns in 20 Years

Chikyoren, which manages money for public entities including regional civil servants, teachers and police, has 27 trillion yen ($247 billion) in assets under management. With half the portfolio tracking global and domestic equities, the fund saw a boost in returns as risk assets around the globe rebounded to record highs on the back of easy monetary policy and fiscal stimulus.

It oversees three funds and uses the returns from one -- the Employees’ Pension Insurance Benefit Adjustment Fund -- to show its fiscal year performance after taking into account the structural changes from pension plan integration in 2015, Sato said.

The fund is also considering expanding its environmental, social and governance investing to include foreign stocks and bonds, Sato said. As of the end of March, the pension fund had an exposure of about 912 billion yen to ESG, or roughly 14% of its Japanese equities portfolio, Sato said. Chikyoren will also consider signing on to the Task Force on Climate-related Financial Disclosures (TCFD) as early as this year, he said.

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