WEST PALM BEACH, FL (HEDGECO.NET) – The world�s largest pension scheme, the Japanese Government retirement pension plan [$379bn,] public pension fund, with more assets than the total GDP ofSwitzerland is set to report positive results at the end of March, 2004 according to Noboru Terada, the executive investment officer of the 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 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 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 fund stems from its ultra-conservative investment philosophy, most of the investment assets in the fund are held in relatively safer investment portfolios, such as government bonds.
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 fund�s assets are devoted to foreign equities. A small portfolio is also devoted to other unspecified short term assets, and about 3% is maintained in cash.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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