Mitsubishi Corp helps pensions move into global infrastructure

Mitsubishi Corp has pushed further into serving pension funds by establishing a ‘strategic partnership’ with New York-based I Squared Capital Advisors (US) LLC, an infrastructure investment manager. The alliance will see the two collaborating on sourcing projects as well as on creating and running the vehicles through which investors can take an interest in them.

Commenting on the deal the Nikkei noted: ‘While there is strong interest in infrastructure projects, which are seen as offering stable returns, until now investors have had to put up at least several billion yen. [The new alliance] will lower that threshold to around 500 million yen … making it easier for …smaller pension funds and regional banks to participate.’

This is the latest development in Mitsubishi Corp’s evolving network of tie-ups which began with its 2011 purchase of private equity consultants California-based TorreyCove (see archive 31 October 2011 Mitsubishi gears up pension product power). The next year it joined the Global Strategic Alliance (see 27 April 2012 Japanese join Canadian plan in huge new infrastructure fund) and in January 2014 launched with UBS a UK-focussed property-development debt fund to which it provided seed capital of GBP50 million.

The giant global trading house is also well-placed to provide its partners with intelligence on transport, warehousing and other infrastructure opportunities as they arise. In Tokyo it owns Mitsubishi Corporation Asset Management and has a 51% stake in Alternative Investment Capital Ltd which has its own tie-up with TorreyCove.  AIC has two people from the parent’s Logistics and Development Group on its board.

I Squared was founded by former Morgan Stanley staffers Sadek Wahba, Gautam Bhandari and Adil Rahmathulla.

Mitsubishi Corp’s press release is here

© 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

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Aging Chikyoren does well, already looks like GPIF clone

The 18.9 trillion yen Pension Fund for Local Government Officials, popularly known as Chikyoren, enjoyed an 8.44% return for the year ending 31 March 2014, according to the   annual results published on its web.

Chikyoren yield 2With asset allocation and yields very similar to those of the Government Pension Investment Fund (see archive 5 July) , Chikyoren is scheduled to move under GPIF’s umbrella by October next year — though the details of how this arrangement will work are not yet known.

Set up in 1983 as the long-term investment arm of a dozen civil service mutual aid associations which were running out of funds, Chikyoren subsequently took in the police pension scheme and that of public school teachers (a full profile is available in the November 2012 archive).

The fund’s allocation to foreign equities rose 26.7% during the term Chikyoren asset allocation 2013-14to reach 13.7% of the portfolio, compared with 11.7% in the prior term, while holdings of domestic stocks rose by 16.1% to reach 16. 1% of the total

Chikyoren’s holdings are dominated by domestic bonds which account for 57.2%, or 10.84tr yen. Just over 3tr yen of this is the fund’s officially imposed ‘duty investment’ in government securities which is down from 6tr yen a decade ago but the rule continues in force.

By 2010 the fund was passed its tipping point with 3,927,000 paying members and 3,973,000 pensioners. By 2020 those numbers are forecast to be 2,695,000 and 4,707,000.

Chikyoren assets by manager type 2013-14The current roster of fund managers is not yet available. Last year it comprised Amundi, Asahi Life Asset Management, BlackRock, DIAM, Goldman Sachs Asset Management, INVESCO Asset Management, Meiji Yasuda Asset Management, Mitsubishi UFJ Trust Bank, Mizuho Asset Management, Morgan Stanley Asset & Investment Trust Management, MU Investment, Nissay Asset Management, Nomura Asset Management, State Street Global Advisors, Sumitomo Mitsui Asset Management, Sumitomo Mitsui Trust Bank, Sompo Nipponkoa Asset Management, Tokio Marine Asset Management and UBS Global Asset Management.

More extensive data than that in the tables shown here has been posted in Microsoft Excel spreadsheets under ‘The Giants’ tab.

© 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

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GPIF boosts passive while giving active different shape

Updated multi-year analyses of which fund management firms were managing what assets for the Government Pension Investment Fund at the close of the financial year close 31 March 2014 are now available under the ‘’Giants’ tab above, or can be accessed here and here.

GPIF portfolio 2002-2014The top ten firms remain much the same as in the preceding term but the most interesting aspect of the numbers is the big shift from active to passive investment – with some nippy newcomers joining the mix.

Eight firms fell off the roster of those actively managing domestic equities but  were replaced by a further eight, plus a returnee, even as the amount managed this way fell by 31.2% to 2,564.1bn yen.Top 20 managers by amounts for GPIF

Capital International, Eastspring Investments (owned by the UK’s Prudential), Natixis Asset Management Japan, Russell Investments Japan, Seiryu Asset Management and Wellington International Management all joined the Fund’s roster for the first time while Goldman Sachs Asset Management and Nomura Funds Research & Technologies, which already have GPIF business, were added in the active equities category.

Since the close of the year the Fund has announced more such appointments and confirmed its new approach.

Even so, the amount under active management is dwarfed by the passive portfolio which swelled 32.1% during the year to reach 18,277.5bn yen and with the mandates formerly held by a trio of firms not being renewed the business is now handled by just five.

International stocks under passive management also rose over over 30% to reach 17,634.4bn yen compared with a 6.3% rise, to 2,096.1bn yen, in actively managed accounts.

 © 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

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GPIF’s domestic equities holdings fall in final quarter of 2013/14

The Government Pension Investment Fund closed the 2014/2014 financial year on 31 March holding relatively and absolutely less in domestic equities than at the end of the previous quarter on 30 December 2013, its annual report published (in Japanese) on 5 July shows.

This is not what many in the markets had been expecting.

The 7% drop in the value of GPIF’s equities is in line with the 6% fall in the stock Topix index over the quarter and may also reflect a reluctance to re-balance the Fund’s portfolio ahead of its announcement in April of a clear out of asset managers and the adoption of a smart beta strategy for Japanese stocks [See archive 7 April GPIF radically revises approach to domestic stocks, and here.]

In the first six months of this year speculation about whether,  when and how GPIF would boost the proportion of Japanese shares in its portfolio has been a major driver of the market.

During this period the trust banks which act as GPIF’s custodians, and are therefore shown in Tokyo Stock Exchange records as the buyers/sellers of shares traded on its behalf, have been the biggest net purchasers of domestic equities.

The Nikkei is reporting the Fund’s results under the misguided headline  Public pension fund pumped 250 billion yen into Japanese stocks in March but the alleged rise is the difference between holdings at 31 March 2014 and a year, not a quarter, earlier.

At 31 March 2014 the Fund held 16.47%, or 20,846.6 billion yen, of its 126,577.1bn yen portfolio in stocks. Three months earlier it reported equities to be worth 17.22%, or 22,147.1bn yen, of its then 128,579.0bn yen portfolio. [This figure appears to have had adjusted for an unknown factor since 17.22% of 128,579.0 is 22,141.3.]

The full position on 31 March 2013 was:GPIF March 2013 asset alloc

At the end of December 2013 it was:GPIF Dec 2013 asset alloca

At the end of March 2014 it was (beware the numbers below are in that much-loved Japanese measure hundreds of millions not the billions used above):GPIF March 2014 asset alloc J

The numbers in brackets  show the difference in hundreds of millions of yen compared with the year before.

At 8.64% the total investment return for 2013/14 was not quite as sparkling as the previous year’s 10.23% but still good enough to see assets at 126,577.1bn yen by the close, only 1.56% less than the year before despite the need for drawdowns to meet the benefits bill.

Performance by sector was (year 25 is the one just closed, see next table down for English):

GPIF performance by segment 2013¬14

Compared with the previous term’s: GPIF retun by segment 2012¬13

English-language versions of GPIF’s annual report typically appear here soon after the Japanese version.

© 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

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Pensions seek diversification via foreign bonds & alternatives

J.P. Morgan’s latest annual survey of Japanese corporate pension funds’ investment intentions has found them aiming to reduce overall risk by lowering target returns and cutting allocations to equities, says a press release about the soon-to-be published results.

Company retirement schemes have also been escaping low-yielding domestic bonds and are now looking to selectively add back some risk via foreign fixed income and alternatives

‘To be specific’, says the statement, ‘the funds have notably increased allocations to strategies that are expected to generate stable income returns with medium risk, such as bank loans, corporate bonds, high yield bonds, infrastructure investments, private REITs, and debt instruments related to real assets’.

Pension fund asset allocation changes J.P.Morgan has found over timeJPMorgan asset allocation 2013-14               The survey was under- taken between early March and June 2014 with 112 defined-benefit corporate plans, 27 employee pension funds and five “others” providing responses. At 1 April 2014 there were 14,311 DB funds and 527 EPFs registered with the Ministry of Health, Labour & Welfare.

J.P.Morgan’s findings from the demand side of pensions management make an interesting accompaniment to those reported from the supply side by the Nomura Research Institute in its annual survey of fund managers published late last year and to a study undertaken jointly by the AIMA Japan and data provider Eureka which appeared on 26 June.

The NRI chart below shows the supply of and demand for various investment products sold to pension funds.

The accompanying text notes that: ‘real assets and products linked to non-life insurance policies are rated as promising asset classes. Multi-asset products and bank loans, both of which were rated as promising opportunities last yeaNRI prension products in demand 2013-14r, [have] migrated to the upper-right quadrant this year due to an increase in the number of companies offering the products.

‘Products reported to be in strong demand are generally those that contribute to diversification of pension asset portfolios’ risk sources, but this year’s survey results suggest that AMCs [asset management companies] have been expanding their offerings of such products, resulting in intensification of competition.

‘Among conventional asset classes, survey respondents reported stronger pension fund demand for fixed income products than for equity products and for foreign assets than domestic assets. This pattern was evident in previous surveys also.’

NRI noted too that it is not movements in investment markets alone that change pension sponsors’ investment preferences. In the 2013/14 financial year company retirement schemes entered a new accounting era in which any deficit hasto be made good immediately out of profits and Japan’s demographics mean that an increasing number — by now probably most –  have passed their tipping points to land at the place where they will permanently have members receiving benefits than paying contributions.

The study by Eureka and AIMA Japan (Alternative Investment Management Association) found that 130 large investor respondents planned to keep at 72.5% that proportion of their alternatives allocation committed to hedge funds and to take on exposure to Asia, the Middle East and Africa while cutting back on Latin America and Europe and keeping steady commitments to Japan.

A press release about the survey, which also sought views on the likely success of Abenomics can be found here.

© 2013 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

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Abenomics gets another iteration

The much anticipated revision of Japan’s Revitalization Strategy is now available in English from the Prime Minister’s Office here.

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Segregated DB pensions hit 100tr yen, foreign managers shine

The value of Japan’s defined-benefit pension funds under external management in segregated accounts passed the 100,000 billion yen mark for the first time at the end of the financial year on 31 March 2014 and may have reached over 120,000bn yen.

assets seg man 2005-2014The lower number forms part of the annual ranking of fund management firms by their DB retirement schemes assets under management which the Japan Pensions Industry Database compiles from returns submitted to the Japan Investment Advisors’ Association (JIAA) by its members.

Uncertainty about the exact total comes about because neither Mitsubishi UFJ Trust & Banking nor Resona Bank belongs to the Association.

When pension assets managed inhouse by the Government Pension Investment Fund and the Pension Fund Association – and thus not available to the market – are taken into account, the total under segregated external and internal stewardship mounts to over 165tr yen. A further 80,000+ bn yen is in pooled accounts at life insurers and trust banks.

JIAA members firms handled 103,542.1bn yen (US$1,005.17bn) on 31 March, up 12.6% on 12 months previously and well ahead of the prior peak of 94,301.50bn yen in 2010.

Mandates in issue rose just 1.85% to 5,230, suggesting that much of the growth in value came by way of accumulated investment returns rather than inflows of new money.

Sumitomo Mitsui Trust Bank, with a hefty 20,085.9bn yen, and Mizuho Trust & Banking, with 14,263.1bn yen, again led the list of 100+ firms which share the segregated business.

Next are BlackRock Japan and State Street Global Advisors (Japan) which swapped positions this time round to come in third and fourth respectively. Eight more of the top 20 firms are foreigners; a pattern repeated throughout the ranking in which almost half the players are headquartered overseas and include many majors. Text continues below table

top 20 firms by seg man DB assets 2014In the Japanese context ‘defined-benefit’ schemes include: so-called ‘Employee Pension Funds’ (EPFs) and the ‘Fund- type’ DB plans which are superseding them, ‘Covenant-type’ DBs which have superseded what were formerly called Tax-Qualified Plans’, civil service Mutual Aid Associations, and the Employee Pension Insurance (EPI, or daiko) contributions managed by GPIF which also invests that part of public contributions to the basic pension not immediately used for paying benefits.

Since 2003 the market has become increasingly bifurcated between corporate and official mandates. It was then that companies began handing over to GPIF responsibility for managing their own and their employees’ contributions to EPI, a duty they had previously discharged themselves.

At the latest count government clients, mostly GPIF, accounted for 78,391.10bn yen of assets and corporate sponsors for just 25,150.96bn yen.

The disparity in mandate sizes was even greater with 221 government contracts worth an average 354.7bn yen and the 5,230 from companies a much lower, but still respectable, 5.25bn yen.

Fastest growing among the top 50 top 5 by growth in db seg man 2014firms over the year were Capital International, up 184.9% on the previous term and moving from 44th or 30th place overall, Natixis Asset Management which grew 103.1% climbing from 35th to 25th rank, and Nikko Asset Management up 72.3% and gaining five places from 26th to 22nd.

Several firms that were ranked below the overall top 50 grew much faster but from very low bases with a single mandate swelling fast or being joined by a second.

Capital International is a good example of the thrills, spills and spoils of the Tokyo market.

top 10 by seg man mandates  2014During the year it lost two mandates from private sector retirement scheme sponsors but the value of corporate pension assets under its management still grew and it gained its first public sector business.

In May the firm took top place in actuarial consultant R&I’s ranking of firms by their capabilities in managing the core Japanese equities components of DB schemes.

For an overseas firm to win such recognition is not unusual. Though often assumed outside the country to be sought after within it simply for their capabilities in markets abroad, foreign managers handle many local mandates and were awarded first place in five of R&I’s 15 domestic categories.

They also took all but two of the top places in the 12 foreign asset classes. which have claimed wider attention as pensions funds’ search for yield has mounted and they have begun looking beyond local securities and debt issued by the US and other industrialised nations’ governments.

Domestic asset managers’ lack of expertise outside Japan means that the business goes to foreign firms who have, in turn, directed more of their marketing towards winning sub-advisory mandates from the powerful trust banks and others rather than directly from pension fund clients.

The JIAA figures show how much each firm manages but the sums are not broken down by the type of client relationship though double counting is ruled out.

With a little help from the yen

During the year under review the suppressed value of the yen saw returns on overseas investments boosted by currency translation gains – a reversal of the longstanding position under which the value of foreign investments was constantly undermined by the ever-rising domestic currency.

At Amundi the change was not enough to compensate for the loss of mandates, two of them from GPIF, which brought its count down from 55 to 51 and a steeper drop in assets from 1,251.2bn yen to 737.4bn yen.

Deutsche Asset Management (Japan) also continued to decline. A decade ago the firm sold its passive business to Northern Trust, now ranked 11th, and in the year just ended it dropped from 72nd to 102nd place with only 24.9bn yen in DB funds under management.

Deutsche Securities, a sister unit, has recently been in trouble with the Securities and Exchange Surveillance Commission for alleged lavish entertainment of officials from multi-company pension funds whose members are typically small firms within the same industry or prefecture.

KTOs Capital Partners was also implicated in the same practices – which many in the industry see as having been widespread — and in the year just closed lost 14 of its 16 mandates which pushed it from 95th to 121st in the JPID ranking.

Meanwhile Deutsche Asset Management (Japan)’s mutual fund business continues to prosper.

Arrivals and departures

The top four players still have a joint market share of over 50% but there is plenty of activity lower down the league table.

The year just ended saw seven firms leaving the field at least temporarily though in the case of Bussan Asset Management the departure is likely to be permanent. This Mitsui unit follows Toyota Asset Management from the fray, leaving only Hitachi Investment Management, ranked 27th, and Panasonic Pension Fund Management, 74th, of the quartet of firms set up to service the needs of the companies within the group which owned them.

Coming in with mandates for the first time are: Japan Asia Asset Management (previously named United Investments), Bluebay Asset Management International (UK, owned since December 2010 by Royal Bank of Canada), Eastspring Investments (Prudential, UK), GI Capital Management, Japan Alternative Investment, Ark Totan Alternative and State Street Global Markets (Japan) which is distinct from the fourth ranked State Street Global Advisors (Japan) and previously made a brief appearance in 2008/9

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To obtain pricing information on the Japan Pensions Industry Database’s full multi-year, multi-data-point rankings of asset management firms standing in relation to defined-benefit pension funds under external management please use the ‘contact’ tab at the top of this page.

© 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

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You saw it here first …

On 16 June ijapicap published Abe attacks ”GPIF’s 61.8% in JGBs, silent on Japan Post’s 61.2%” (see below) which noted that while the air over Tokyo is thick with speculation about the consequences of government obliging the semi-independent GPIF to sell much of its holdings of Japan Government Bonds, nobody is saying a sausage about the JGBs in the portfolio of Japan Post Insurance which is entirely a creature of government.

Not for long!

On 18 June Bloomberg carried story quoting various asset managers as expecting big shifts in Japan Post’s portfolio and suggesting that “The postal service’s President Taizo Nishimuro may address the issue at a monthly press conference as early as next week.”

Just to be clear: Taizo Nishimuro is the chairman of Japan Post Holdings which has three major constituents. They are JP Bank, JP Insurance and JP Post. Each has its own president.

Mr Nishimura is a former chairman of the Tokyo Stock Exchange and a former chairman of Toshiba Corp.

 © 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

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Reports of GPIF selling JGBs probably exaggerate the reality

The Government Pension Investment Fund [GPIF] and civil service retirement schemes held 1.8 trillion yen less in ‘central government securities’ on 31 March 2014 than on 31 December 2013, Bank of Japan flow of funds figures show.

This investment category includes both Japan Government Bonds and debt issued by the Fiscal Investment & Loan Programme (FILP, or zaito bonds) which the pension funds have a longstanding arrangement with government to hold to maturity and then retire rather than renew.

At the end of March, Ministry of Finance figures reveal, FILP had 104.29tr of bonds in issue, 914bn yen down on the end of December.

So it would seem that at least half of what has been reported as ‘JGB selling’ by the funds, on the basis of the BoJ numbers, is simply FILP paper being retired. About 80% of the amount held by GPIF and the public service retirement schemes as a group is with GPIF.

© 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

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Abe attacks GPIF’s 61.8% in JGBs, silent on Japan Post’s 61.2%

A first glance at the breakdown of Japanese life insurance companies’ assets at the end of the financial year on 31 March, published last week by their trade association, suggests that the long awaited jump in the proportion of portfolios allocated to overseas securities has started to happen.

It hasn’t.

Plug in the exchange rate and it is clear that a good chunk of the apparent rise (see table) was caused by a fall in the value of the yen which boosted the worth of existing foreign investments from 16.2% to 17.5% of the overall total once translated into domestic currency.

However, when the holdings of Japan Post Insurance are deducted from the industry-wide aggregate the proportion which other firms have abroad hits 19.7% — the highest in 10 years and ahead of 19.1% seen in 2005 before the state-owned behemoth joined the Life Insurance Association of Japan and its numbers were included in the pool.Story continues below tablesuntitled 5LIAJ 31 March 2014Although the relationship between the yen and the size of the portfolio’s foreign component has been unsteady over the past decade, the currency’s value is likely be the main driver for investing abroad from now on.

With the Japanese unit having apparently departed from its 30-year tendency to ever-greater strength, insurers can today make investments in expanding overseas economies without fearing that the value of their holdings will shrink when converted to local terms.

Life cos have been growing beyond their contracting home market by using the super-strong yen to buy foreign insurance firms relatively cheaply. The narrowing of this acquisitions window will provide an impetus for them to grow via overseas portfolio investment too.

In the year ending 31 March 2007 ‘foreign securities’, which is not disaggregated, accounted for 18.8% of Life Insurance Association of Japan (LIAJ) members’ investment assets and domestic stock for 14.7%. Both numbers were the same the year before and the year before that they were 19.1% and 11.5%.

When data from Japan Post Insurance, nicknamed Kampo, were included for the first time in the 2007/2008 financial year, industry-wide foreign securities holdings plunged to 13.5% of portfolios and Japanese equities to 7.3%.

By 31 March 2014 the numbers had swelled to 17.5% for overseas investments but local stocks were languishing at 5.1%. At this time Kampo had total investment assets of 85,804 billion yen, almost 35% of the LIAJ total of which just 1.4% was in foreign securities and domestic stocks were down to zero.

When the Kampo numbers are deducted from the LIAJ totals, the remaining Association members are shown to have 5.3% in domestic stocks and 19.7% in foreign securities. LIAJ v KampoThis strongly suggests that – since the postal firm’s business is not dissimilar from that of its competitors – it has loads of room to accommodate more of both types of asset.

The indications so far are that it is only prepared to dip the tip of a tiny toe into the stock market. As Reuters reported on 22 May, drawing on unnamed sources, the insurer will invest up to 350bn yen in Japanese equities in the current financial year and add approximately 640bn yen to its foreign bond holdings.

By contrast, upping Kampo’s overseas holdings to the 19.7% mark of its competitors would see it investing 16,903.39bn yen abroad.

More significantly for domestic equities, increasing its Japanese stock holdings to 5% would pump 4,290.2bn yen to the local market.

This potential of such a boost appears to have entirely bypassed the Abe government which seems obsessed with telling the Government Pension Investment Fund to cut the 61.81% of its portfolio it holds in Japan government bonds and use the proceeds to buy stock.

By a curious coincidence Kampo keeps 61.2% of its portfolio in JGBs and does so without attracting a word of official criticism, even as it continues to be widely seen as a creature of government which is there to do official bidding and not make decisions for itself.

GPIF has a measure of independence and at 31 March 2014 (the next annual report is due very soon) had 12.35% in international stocks, 9.79% in foreign bonds and 14.5% in Japanese equities – all massively beyond Kampo’s allocations to these classes.

Moreover, Japan Post Group intends to list on the stock exchange next year and potential investors could take a dim view of a portfolio chock full of JGBs which will make the value of its holdings vulnerable to a rise in interest rates and thus fall in bond prices if government’s efforts to spur inflation are successful.

Since November last year, when an official ‘expert panel’ made recommendations on GPIF’s asset allocation, the Fund has been the target of a pitilessly persistent round of official – or officially inspired — briefings telling it sell bonds and buy stocks.

Meanwhile nobody — not even the talkative Prof Takatoshi Ito, who chaired the GPIF panel — has uttered a word about the portfolios of Japan Post Insurance and Japan Post Bank (known as Yucho).

Both Japan Post and Ministry of Finance sources say that Group no longer holds FILP (Fiscal Investment & Loan Programme) debt paper so that is presumably not the reason for the silence.

Yet Kampo and Yucho hold a huge chunk of the 1.5 quadrillion yen in household savings which the Abe government says it is intent on mobilising.

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This issue has been hiding in plain sight for a long while and thanks are due to the ijapicap reader who gave me big nudge toward it.

For an earlier posting on Japanese life insurers asset allocations plans in April-October 2014 see archive 29 April 2014 Life cos tend to caution not big shifts in asset allocation.

Fitch Ratings also published a report on Japanese life insurers’ investment intentions last week. It is here.

 © 2014 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes commitment, money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

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