Japan’s mega trust banks up equities allocations

29 April 2014   Category: News, Asia, Global, Japan   By Maya Ando

Japanese mega trust banks, including Sumitomo Mitsui Trust Bank, Mitsubishi UFJ Trust and Banking, Mizuho Trust and Banking, and Resona Bank, will allocate more investment to equities, while reducing government bond holdings, in order to generate higher returns for clients.

Corporate pensions amount to nearly half of the accounts, equivalent to 36 trillion yen (US$352.27 billion), by aggregation that these banks manage in total.

For fiscal year 2014, which began on April 1, asset allocation for combined domestic and overseas equities has been raised to 58%, an increase of four percentage points. The allocation for foreign stocks will mirror that of local shares, at 29% of holdings.

This represents the highest proportion since the Lehman Brothers crisis in 2008, indicating the extent of the recovery in the local market.

By contrast, investments in Japanese government bonds have been reduced by four percentage points to 31%. 

The adjustment to allocation ratios has been made amid Japan’s long-standing, extreme low interest environment.

Japan’s Government Pension Investment Fund (GPIF), the world’s largest manager of retirement savings with US$1.26 trillion in AUM, earlier this month overhauled its investment committee amid a push by Mr. Abe for it to cut its bond holdings and buy higher-yielding assets.