Japan’s largest pension fund shifts to active domestic bond management, aiming to improve returns and support the yen amid market volatility.
Japan’s Government Pension Investment Fund (GPIF) has appointed active domestic bond managers for the first time since 2019, selecting three firms to oversee Japanese government bonds. The move targets benchmark-beating returns and better risk diversification as volatility in Japan’s debt markets rises.
GPIF’s domestic bond portfolio posted a 5.1% loss in the year ended March 31, contrasting with a 16.5% gain in total assets. The shift follows pressure from officials to increase domestic investments, which analysts say could support the yen over time.
The decision coincides with inflation concerns, higher government spending, and a Bank of Japan tightening cycle perceived as slow by some investors.