What will happen to pensions?What does "change in operation policy" mean by 160 trillion yen in investment assets?

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What will happen to my pension? 160 trillion yen in assets under management What does GPIF's "management policy change" mean? is what happened. Due to negative interest rates, it has become difficult to buy Japanese government bonds for the purpose of hedging risks. Foreign bonds that have hedged the exchange rate will be treated as domestic bonds, thereby significantly increasing the ratio of foreign bonds. Around the time of this change in management policy, it was reported that GPIF's CIO (Chief Investment Officer) Hiromichi Mizuno would retire. In the end, Mr. Mizuno was retained and continued to be in charge of operations. What is happening to the GPIF, which entrusts pensions, which are a valuable asset of the people?

Economic Commentator Keiichi Kaya

Economic Commentator Keiichi Kaya

Keichi Kaya Economic Commentator Born in Sendai City, Miyagi Prefecture in 1969. After graduating from the Department of Nuclear Engineering, Faculty of Engineering, Tohoku University, he joined Nikkei Business Publications as a reporter. Moved to Nomura Securities Group's investment fund management company and was in charge of corporate evaluation and investment operations. After independence, engaged in consulting services for central ministries and agencies and government-affiliated financial institutions. Currently, he writes in various fields such as economy, finance, business, and IT. His publications include Poor Country Nippon (Gentosha Shinsho), The Road to a Billionaire is Written in Economics (Cross Media Publishing), Feeling Economics (SB Creative), and Post New Industrial Revolution. (CCC Media House), "Study on the New Wealthy Class - A New Mechanism to Change the Japanese Economy" (Shodensha Shinsho), and "The Essence of War and the Economy You Should Acquire as Education" (Sogo Horu Shuppan).

1. Abenomics transformed public pension operations 180 degrees
2. Trump's aggressive monetary policy changed the market
3. No longer a risk Can't hedge?
4. GPIF's new portfolio attracting market attention

Public pension investment changed 180 degrees with Abenomics

GPIF (pension reserve management investment Incorporated administrative agency) is an organization that manages and manages the reserve fund of the employees' pension and the national pension among the public pensions in Japan. Its assets under management amount to 159.2154 trillion yen (based on the end of fiscal 2018), making it the largest in the world. In the past, due to the nature of public pension funds, safety was the first priority, but in response to the strong will of the Abe administration, we have transformed into one of the world's leading investment funds that actively invests in domestic and U.S. stocks. rice field. Currently, it invests 25% in domestic stocks, 25% in overseas stocks, and 17% in overseas bonds, and has accumulated over 65 trillion yen in earnings since it began operating the market in 2001. Especially in recent years, it has continued to generate high profits thanks to the rise in U.S. stocks due to the Trump market. However, there have been criticisms as to whether public pension funds, which are the last bastion for the public, should be diverted to high-risk investments, and accumulated capital gains in asset management aimed at making up for deficits in pension finances that occur every year. There have been discussions for some time about whether an investment policy that emphasizes If you consider the GPIF to be a general investment fund, you can assume that it has continued to perform well so far. However, investments centered on stocks are high risk, and as represented by the collapse of Lehman Brothers, there is a possibility that stock prices will plummet at once and reduce the amount of funds under management. For this reason, many investment funds manage their overall risk by including products in their portfolios that behave in the opposite direction of stocks. GPIF has also purchased bonds as a means of hedging against stocks, but it is now in trouble. The Bank of Japan's quantitative easing policy has led to the purchase of government bonds to a bubble-like level, and the abnormal situation of negative interest rates has become permanent, making it impossible to purchase government bonds any further. If you buy foreign bonds that hedge foreign exchange risk to some extent, you can get the same effect as owning domestic bonds. , it is not possible to purchase stocks or bonds beyond this range without permission.　For this reason, GPIF will change its investment policy to treat foreign bonds with currency hedging as domestic bonds, allowing it to purchase foreign bonds at a level above the permissible level. Series List

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Mr. Trump's aggressive monetary policy changed the market

But it is not the case that it will be all right if foreign bonds hedged against exchange rates are included. U.S. President Donald Trump, who is aiming for re-election, is pursuing a fairly aggressive monetary policy, and market distortions are escalating to the maximum around the world. Even if they actively purchase foreign bonds, the possibility is increasing that they will not be able to hedge their risks. The US central bank, the FRB (Federal Reserve Board), has decided to end the quantitative easing policy in response to the US economic expansion and has been raising interest rates. It would be a very natural course of action for a central bank to raise interest rates while the economy is doing well, and to leave as much room as possible to cut interest rates in case the economy really takes a turn for the worse. But Trump put a stop to the move. Mr. Trump narrowed the siege against the Fed by repeatedly urging Fed Chairman Powell, who is searching for a balanced monetary policy, to "reduce interest rates" and "lack of guts," and even suggested Mr. Powell's dismissal. It's here. Unable to withstand the pressure, the Fed has frozen rate hikes, effectively reinstating accommodative monetary policy. As a result, stock prices rose again, but on the other hand, long-term interest rates dropped sharply (in other words, bond prices rose), and both stocks and bonds were bought to historically high levels, creating a kind of anomalous situation. With China's economy stalling, global money is concentrated in US stocks and bonds. If the US market collapses here, bonds will also be bought to a bubble-like level, so it will not be possible to allocate the escape funds from stocks to bonds. For this reason, it is easy to fall into a catastrophic situation where both stocks and bonds are sold. Moreover, the stock markets of each country are completely linked, so it would be difficult to choose to allocate funds to markets other than the United States. At present, it seems that gold is probably the only means of hedging. Investment managers in each country should already be feeling a lot of fear, but as long as US stocks and US bonds are rising at a rapid pace, there is no choice but to ride the wave of the market. The reality is that we are. [next page] Is risk hedging no longer possible? Why

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