Figures just published* by the Japan Investment Advisors’ Association show that corporate and civil service pension schemes’ assets managed in segregated accounts under mandates held by JIAA member firms the rose only 0.53% in the first quarter of the 2014/15 financial year, ending 30 June, to reach 26,563.3 billion yen despite a 2% rise in the Nikkei 225 during the period and gains for European and US stocks. Year-on-year the number was up by 2.15%.
Such constrained increases are largely a result of the demographics that have drawn the funds into an era of decumulation where they will forever have more going out annually in benefits than they have coming in each year via contributions, and the gap is widening.
During the quarter the amount which JIAA members managed for the Government Pension Investment Fund rose 1.76% to 79,772.3bn yen, almost exactly three times what they invested for non-GPIF customers. While this rise was 4.53% year-on-year most of it came before the current financial year began.
(The sum managed for GPIF by JIAA member firms omits amounts under the stewardship of Resona Bank and Mitsubishi UFJ Trust and Banking, neither of which is a JIAA member, and the yen fixed-income portfolio which is managed in-house. It is therefore is less than than the giant’s own number for its total assets.)
While the number of mandates held in respect of non-GPIF funds fell again to reach 4,727, the lowest in a decade, mandates from the Fund rose to 232 from 226 a year ago.
All told, assets under management rose 2.48% quarter-on-quarter to 172,423.0bn yen of which 25,714.4bn yen came from overseas customers.
The JIAA does not break down its numbers to show in what asset classes each type of investor puts its funds.
Assuming that the amount under management for foreign clients is invested in Japan, then domestic clients, of which pensions make up 74%, appear to allocate their funds as follows:
- Japan bonds 32.94% (down from 35.41% a year ago and 33.02% a quarter ago)
- Japan stocks 26.25% (up from 23.82% and 25.43%)
- Foreign bonds 27.49 (compared with 27.42% and 27.50%)
- Foreign stocks 18.71% (compared with 16.43% and 18.32%).
- The rest is in ‘real-estate related securities ’ and short-term investments.
Such dispositions are not inconsistent with the percentages reported by Pension Fund Association members (see story below), all of which are from the private sector. JIAA totals for Japanese pension funds other than GPIF are different from those of the Bank of Japan because they cover only segregated accounts and thus do not include money in pooled ‘general accounts’ at life insurers and trust banks (for an update on which see this blog next week).
GPIF has such a huge weight in JIAA totals that it is difficult to discern any trends among corporate schemes. However, it does appear that they too are holding on to their Japan Government Bonds. This is partly a function of their need for cash to pay mounting benefits bills.
JIAA numbers do not include amounts managed for mutual funds. These appear instead from the Japan Investment Trusts Association.
* Currently in Japanese only at www.jiaa.or.jp/toukei. Usually available in English after about one week at www.jiaa.or.jp/toukei_e/index.html
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