The World’s Largest Retirement Fund May Post First Positive Results
Soon
Japanese Government retirement fund
The world’s largest pension scheme, the Japanese Government retirement
pension plan [$379bn,] public pension fund, with more assets than the
total GDP of Switzerland is set to report positive results at the end
of March, 2004 according to Noboru Terada, the executive investment officer
of the pension fund.
The Government Pension Investment Fund lost about US$5bn since the fund’s
inception in April 2001. Strong equity performance recently has boosted
the profits in the retirement fund. Noboru said, "Up to December
we have had positive returns and assuming there are no major changes in
the market up to March we can expect to report a satisfactory result for
the year,"
For about a decade, Japanese economy has witnessed economic stagnation,
the government pension fund scheme suffered a serious set back as resources
continued to diminish, in direct relation to the weakness in the Japanese
stock markets. Part of the troubles of the government retirement fund
stems from its ultra-conservative investment philosophy, most of the investment
assets in the retirement fund are held in relatively safer investment
portfolios, such as government bonds.
Pension funds with hedge fund strategies
Many pension funds and endowments in the United States and Canada have
implemented hedge fund investment strategies, while maintaining adequate
diversified portfolios. Things are slowly changing in Japan, recently
the Japanese Government granted investment officers of the pension fund
new flexibility in its investment criteria, including authorization to
invest in hedge funds. [Hedgeco.net Previous story]
Noboru explained that any hedge fund investment must be however approved
by a government committee before any disbursement of funds. The Government
pension fund has about 50% of its assets currently invested in Japanese
bonds, and another 25%, invested in Japanese equities while 13% of the
pension fund’s assets are devoted to foreign equities. A small portfolio
is also devoted to other unspecified short termshort-term assets, and
about 3% is maintained in cash.
Paul Oranika
Editor-in Chief
Hedgeco.net
Email: Editor@hedgeco.net
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