Dec. 10 (Bloomberg) -- Japan’s government retirement fund, the world’s largest, plans to invest in overseas infrastructure as it seeks to diversify its portfolio, according to two people with direct knowledge of the matter who asked not to be named because the discussions are private.
Japan’s Government Pension Investment Fund plans to make the investment in partnership with a foreign public pension fund, according to the people, who declined to disclose the nationality of the other party. The Development Bank of Japan will provide the GPIF with expertise in infrastructure enterprises, they said.
The 124 trillion yen ($1.2 trillion) pension fund is under pressure to boost returns beyond what it earns on Japanese government bonds that yield less than the pace of inflation, and GPIF President Takahiro Mitani said in an interview last week that a move into alternative assets could begin in about a year. A move into foreign infrastructure by GPIF would follow similar steps taken by private pensions including the program run by cosmetics-maker Shiseido Co.
GPIF spokesman Tomoyuki Hirao and DBJ spokesman Keisuke Kuma both declined to comment on the fund’s plans in telephone calls. A government panel on Japan’s financial and capital markets will provide details of the investment in a report to be published Dec. 13, the people said.
Takatoshi Ito, head of a separate advisory panel to the GPIF, said in an interview last week that the fund needs to cut local debt holdings now. Ito said the GPIF should pare domestic bonds immediately to 52 percent of assets, its lower limit.
The GPIF’s website states its portfolio allocations are scheduled to remain unchanged until March 31, 2015.
--With assistance from Shigeki Nozawa in Tokyo. Editors: Andy Sharp, Chris Anstey