Japan owns the world’s largest public pension fund, an amount that totals to a staggering US$1.26 trillion, which for comparison is bigger than the whole economy of Mexico. Japan Prime Minister Shinzo Abe is looking to move the mostly stagnant funds towards a more aggressive investment strategy, mainly as a contributing catalyst for kickstarting Japan’s chronically ailing economy. And so on Tuesday, Japan’s Government Pension Investment Fund (GPIF) appointed new committee members who can accomplish Abe’s directives.
Abe’s drive is to have the fund make riskier investments and rely less on low-yielding government bonds. This new committee will now play a lead role in setting the GPIF’s new investment allocation targets over the next few months. And with a fund this large, global economies and financial markets are surely watching as to how GPIF will make its investments. The fact remains that the fund – and how it is managed – could be a huge indicator for other Japanese institutional investors. Abe has, very early into his term, looked to reform the GPIF as an element of his growth strategy, the “third arrow” in his aggressive fiscal policy.
Japan’s Health Minister Norihisa Tamura is the one who appoints GPIF Investment Committee members, and for this new group, he cut down the number of the committee to eight members. Two members of the old committee retained their seats and one former member was brought back on. Tamura said on Tuesday that he hopes the investment committee will be able to raise the investment returns while controlling risks that would be taken. “The interests of pension beneficiaries come first in pension fund management,” Tamura told a news conference after the regular cabinet meeting.
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