Japan's pension funds boost foreign assets to record

Japan's public pension funds boosted holdings of foreign assets to a record in the three months through December, while reducing their investment in local sovereign debt to the least in more than a decade.

The funds bought a net 1.3 trillion yen ($11.5 billion) of overseas securities, bringing their total to 59.5 trillion yen, and also added to investments in domestic equities, Bank of Japan data published Friday show. They offloaded a net 704.4 billion yen in Japanese government bonds, leaving them holding 51.8 trillion yen of such debt, the lowest total since the third quarter of 2004.

The shifts may reflect trading by smaller peers of the $1.2 trillion Government Pension Investment Fund, which decided last year to align their investment strategies with GPIF's from October. The retirement managers' stock buying also came after a third-quarter rout in equities eroded the value of shares they already held, taking them further from target allocations.

Japan's Topix index of stocks rebounded 9.7 percent in the three months through December after plunging 13 percent the previous quarter as China's shock currency devaluation drove stocks around the world lower. A measure of global equities rose 4.6 percent after a 9.9 percent drop the three months before. Pension funds for civil servants, local government officials and private school teachers, which managed about 30 trillion yen at the time, said a year ago they would adopt targets of 25 percent each for domestic and foreign equities, 35 percent for domestic bonds and 15 percent for overseas debt as of Oct. 1.