9 JULY 2018
BY FLORENCE CHONG
EmailComment Add to my reading list
Allocation to alternative investments, such as real estate, by Japanese pension funds is at a record high, with many intending to increase their holdings further, a survey has revealed.
The survey by JP Morgan Asset Management (JPMAM), which polled 120 Japanese pension funds, found that the average Japanese pension fund now allocates 17.1% of its portfolio to alternative investments.
That allocation had climbed over the last five years, up from just 11.4% in 2013, the survey said.
And the majority (59.2%) of pension funds intend to further increase their allocation to alternatives next year.
EPRA Conference 2018
Akira Kunikyo, an investment specialist at JPMAM, said: “Alternatives have truly become a mainstream asset class for return-constrained Japanese pension fund investors.”
He said the objectives for using alternatives along with expected risk and return levels vary widely, but most investors view alternatives as a source of stable cash flows with low correlation to public markets.
A growing number of pensions are also allocating to less liquid asset classes, suggesting that they are comfortable capitalising on the illiquidity premium.
The most popular types of alternatives were income-oriented assets - including real estate equity and debt, private infrastructure equity and debt, private credit and private placement real estate investment trusts.
KGAL celebrates 50th anniversary in 2018 following a record year
ㅡㅡㅡ
Japan's GPIF generates 5.25% return from infrastructure investments
10 JULY 2018BY FLORENCE CHONG
EmailComment Add to my reading list
Japan’s Government Pension Investment Fund (GPIF) has recorded a return of 5.25% (in US dollars) on its ¥196.8bn (€1.51bn) core infrastructure portfolio in the 12 months ending 31 March 2018.
It is the first time that the ¥156.4trn pension fund has disclosed details about its alternative investments in its annual investment report.
According to the report, the infrastructure portfolio includes investments in the Port of Melbourne in Australia, and Birmingham Airport, Bristol Airport and Thames Water in the UK.
GPIF said its infrastructure investments were located mostly in the UK (57%), Australia and Sweden (both 15%), Spain (10%) and Finland (3%).
KGAL celebrates 50th anniversary in 2018 following a record year
The pension fund first invested in infrastructure in 2014 when it become a co-investor in the Global Strategic Investment Alliance (GSIA) with Canadian pension fund OMERS and the Development Bank of Japan (DBJ).
It also invests globally in infrastructure funds through multi-managers DBJ Asset Management, StepStone Infrastructure & Real Assets and Pantheon.
GPIF’s real estate exposure is smaller at ¥8.1bn, according to the report. The pension fund plans to increase this through domestic and global multi-manager mandates.
Late last year it appointed Mitsubishi UFJ Trust as its domestic real estate multi-manager, and has yet to announce its global real estate multi-manager.
GPIF’s plans to invest in core real estate to generate long-term, stable income.
Norihiro Takahashi, GPIF’s president, said the pension fund’s overall portfolio returned 6.9% for the fiscal year.
He attributed the performance to a strong global economy, which had buoyed global stock markets, but warned of uncertainties now created by trade tensions between the world’s largest trading nations.