Japan pensions cut stocks, buy emerging mkts-survey

TOKYO, April 20 (Reuters) - Japanese corporate pension funds have been raising investments in emerging markets aimed at diversifying their assets while continuing to cut exposures to domestic stocks, a JP Morgan Asset Management survey showed.

The Japanese fund management arm of U.S. bank JP Morgan & Chase (JPM.N) surveyed 131 corporate pension funds, which represent about 12 trillion yen ($130 billion) in assets or about one-fifth of the overall assets held by domestic corporate pensions, from early March to early April.

Corporate pension funds on average held 20.2 percent of their investment funds in domestic equities at the end of March, down from 22.5 percent the previous year, the survey showed.

"Many pension funds are lowering weightings in risk asset such as stocks as many have lowered their target returns," Hidenori Suzuki, a vice president at JP Morgan Asset Management Japan, told a news conference on Tuesday.

Pension funds' exposures in stocks have deteriorated over several years. They were also hit by the financial crisis.

But corporate pension funds in Japan posted a positive return for the first time in three years in the financial year to March.

The rate of return on the pension funds jumped to 13.8 percent in the year to March after posting a record loss the previous year due to the financial crisis, a preliminary survey by Towers Watson showed earlier in the month. [ID:nTOE63400R]

Meanwhile, corporate pension funds increased exposures in safe assets such as domestic bonds, Suzuki said.

Their weightings in Japanese bonds rose to 35.3 percent at the end of March from 34.8 percent the previous year.

Pension funds were also eager to get higher returns and diversify their portfolios into promising areas such as bonds and stocks of emerging markets, Suzuki said.

The survey showed that nearly 70 percent of pension funds have been investing in emerging market equities and another 10 percent are planning to invest in the asset class.

Corporate pension funds have also shown strong interest in taking exposures in real estate and infrastructure-related instruments, Suzuki said. ($1=92.43 yen) (Reporting by Chikafumi Hodo; Editing by Michael Shields)