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World’s Largest Pension Fund Keeps Analysts in Dark on Portfolio

Shigeki Nozawa and Shoko Oda
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World’s Largest Pension Fund Keeps Analysts in Dark on Portfolio

(Bloomberg) -- Japan’s Government Pension Investment Fund’s decision to not disclose details of its quarterly allocation breakdown has some analysts saying that the world’s biggest pension fund is backtracking on transparency.

In a statement on Nov. 1, GPIF President Norihiro Takahashi said the fund won’t disclose the allocation breakdown, amounts and investment income for each asset class this fiscal year, as it reviews the composition of its basic portfolio, which totals about 161.8 trillion yen ($1.5 trillion). The GPIF subsequently posted quarterly results without the details.

While the GPIF may have opted to hold back the information to corral market speculation on changes to its portfolio, the move reduces transparency and causes unwanted guessing among investors, according to Hidenori Suezawa, chief strategist at SMBC Nikko Securities in Tokyo.

“It’s clear transparency has receded from this decision,” he said. “It just stirs up even more speculation. It brings unnecessary attention to the matter.”

The GPIF president’s proposal to withhold asset details was debated during a board of governors meeting on Aug. 27, according to minutes released on Nov. 1. During discussions over the new basic portfolio, an unnamed executive managing director cited speculation risks seen in other pension funds. Others in the minutes said it was risky to change the disclosure procedure, with one member saying that it would look “unnatural” for the fund to suddenly not disclose information that had been available to the public.

The fund, which announced its basic portfolio about five years ago, is expected to reveal its new allocation sometime before the fiscal year ends on March 31. The GPIF has a general target to keep 25% of its basic portfolio in domestic stocks and 25% in overseas shares. The permissible range of deviation is 9% for local equities and 8% for stocks abroad. The target is 35% for domestic bonds and 15% for foreign debt, with a permissible deviation of 10% and 4%.

“There’s a higher chance of GPIF increasing the target for foreign bonds in the next basic portfolio,” said Shuichi Ohsaki, chief rates strategist at Bank of America Merrill Lynch in Tokyo. “For example, foreign bonds may be increased by 5 points, while domestic bonds decrease by 5 points.”

GPIF spokesperson Nao Honda declined to comment to Bloomberg News on the market’s speculation.

Investors are focused on the GPIF’s holdings of yen-denominated bonds and currency-hedged foreign debt, said Takafumi Yamawaki, head of local rates and FX research at JPMorgan in Tokyo. The fund announced last month that it would give itself leeway to buy more bonds from outside its home market by classifying currency-hedged foreign bonds as part of its domestic debt.

“The GPIF is seeking a way to boost its performance,” Yamawaki said. “But it has also caused further speculation by hiding its motives.”

(Adds chart and GPIF spokesperson’s response in third-to-last paragraph.)

To contact the reporters on this story: Shigeki Nozawa in Tokyo at;Shoko Oda in Tokyo at

To contact the editors responsible for this story: Lianting Tu at, Naoto Hosoda, Kurt Schussler

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