Note: The Japanese Employee Pension Fund Report is analyzed based on the Fund Earning Reports that were submitted to the Japan’s Minister of Health, Labor and Welfare (According to the Japan Pension Rule Number 56 Article 2) every fiscal year from the Investment Management Teams. Content and data of this report are precisely reviewed and revised as of September 26, 2012 and it documents data up till March of 2012. The total number of funds found in Japan (as of March 2012) is 577.

Article  edited by Diana Liu


Allocation of Total Japanese Employee Pension Fund (as of March 2012)

*Currency in JPY

Total Asset of the Japanese Employee Pension Funds that were allocated as of March 2012 reached a total of 17.71 trillion JPY. Among the different investment types, 15.6% were allocated in Other Investments such as Hedge Fund, Real Estate, Private Equity and other alternatives.

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Types of Management Accounts within Employee Pension Funds (as of March 2012)

*Currency in JPY

Majority of the Japanese Employee Pension Fund Assets are managed by Trust Banks and almost 0% are self-managed. This means almost 100% of the total assets in the Japanese Employee Pension Fund were consigned under at least 1 or more Fund Management, either with trust banks, life insurance or some types of Financial Instruments or Business Operator. According to the report, majority of the funds consign with at least 1-15 Fund Managers.

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Number of Japanese Employee Pension Fund under Other Investments for the Past 5 year

*Currency in JPY

Over the past 5 years, total Japanese Employee Pension Fund asset decreased while assets in Alternative Investments increased almost 4%. Either the asset decrease was caused by economic recession or increase in the number of retirements; fund managers are investing more in the Alternative markets because of its higher return.

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Japanese Employee Pension Fund Asset Allocations

*Currency in JPY

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Japanese Pension Fund’s Investment Yield for the Past 5 Years (%)

Other investments generally include those in alternative investments, such as real estate, private equity, hedge fund etc. These investments generate high profits but also contain high risk as well. In the first graph, Japanese Employee Pension Fund Asset Allocations, we see that GPIF invest 0% in alternatives while Corporate DB Pension Funds only invest 7.9% in alternatives& hedge fund. But from the second table, Japanese Pension Fund’s Investment Yield for the Past 5 Years (%), GPIF’s yield change is significantly smaller than Corporate DB Pension Fund's and the Total Japanese Employee Pension Fund's. Thus we conclude, because risk in Japanese Government Bond is small, it doesn’t generate much profits in years where financial investments were good (2009), which is why GPIF’s yield variation is very narrow; whereas Corporate DB Pension Funds and Total Japanese Pension funds invest in alternatives, although risky but it generates high return. In recent years, more and more fund managers are starting to invest in Alternative investments because of its high potential profits and opportunities. As of 2013, GPIF has announced its initial investments research in the Alternative Investment.

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