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27 Feb 2015
Portfolio shift by Japanese pension funds to limit USD/JPY downside risk in 2015 – Nomura
FXStreet (Barcelona) - Yujiro Goto, Research Analyst at Nomura, explains that the aggressive shift in portfolios of Japanese pension funds into foreign bonds and equities will likely limit the downside for USD/JPY this year.
Key Quotes
“One of the public pension funds, the Federation of National Public Service Personnel Mutual Aid Associations (KKR), announced its new target portfolio yesterday, in which the fund has the same aggressive target for foreign assets as the GPIF. The target for foreign bonds has been raised to 15% from 2%, while the foreign equity target has been increased to 25% from 8%.”
“The fund’s AUM were JPY7.6trn ($65bn) as of end- March 2014, much smaller than that of the GPIF. The decision to follow the GPIF’s new target portfolio is also expected.”
“Nonetheless, the fund had a more conservative target portfolio than the GPIF, and the domestic bond target share has been lowered significantly to 35% from 74%.”
“Thus, we expect an aggressive portfolio shift by public pension funds to limit downside risk to USD/JPY this year, and KKR’s decision is encouraging for our gradual JPY weakness forecast this year.”
Key Quotes
“One of the public pension funds, the Federation of National Public Service Personnel Mutual Aid Associations (KKR), announced its new target portfolio yesterday, in which the fund has the same aggressive target for foreign assets as the GPIF. The target for foreign bonds has been raised to 15% from 2%, while the foreign equity target has been increased to 25% from 8%.”
“The fund’s AUM were JPY7.6trn ($65bn) as of end- March 2014, much smaller than that of the GPIF. The decision to follow the GPIF’s new target portfolio is also expected.”
“Nonetheless, the fund had a more conservative target portfolio than the GPIF, and the domestic bond target share has been lowered significantly to 35% from 74%.”
“Thus, we expect an aggressive portfolio shift by public pension funds to limit downside risk to USD/JPY this year, and KKR’s decision is encouraging for our gradual JPY weakness forecast this year.”