September 30, 2019 / 11:08 AM / 23 days ago

Japan's GPIF to allow increased investment in foreign bonds - Nikkei

TOKYO, Sept 30 (Reuters) - Japan’s Government Pension Investment Fund (GPIF) will adjust its framework to allow more holding of foreign bonds, the Nikkei said on Monday, as the world’s top pension fund continues to move away from domestic debt, given ultra-low rates.

The GPIF, which manages about 160 trillion yen ($1.5 trillion) of pensions, will start classifying hedged foreign bonds as domestic debt, giving it more room to boost holdings of foreign bonds, the Nikkei said.

Under its current portfolio framework, the fund cannot hold more than 19% of its porfolio in foreign debt. That was at 18.05% as of the end of June, according to the fund’s website.

A spokeswoman at the GPIF declined to comment on the report.

Given Japan’s ultra-low interest rates, the fund has retreated from unprofitable domestic bonds and pushed into foreign assets. Because of its sheer size, the GPIF’s investment moves are closely watched by global investors.

It had 26.9% of its portfolio in Japanese bonds as of end-June, compared with 36.15% in September 2016 when the Bank of Japan launched its policy of pinning 10-year government bond yields at around 0. ($1 = 107.9600 yen) (Reporting by Takashi Umekawa; Editing by David Dolan and Louise Heavens)

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