Japan government pension fund takes dive into real estate
Big step in broader diversification strategy
Japan’s Government Pension Investment Fund has begun actively investing in the country’s real estate funds in a quest for higher returns.
GPIF, the world’s largest pension fund, selected Mitsubishi UFJ Trust and Banking on Tuesday to manage real estate holdings, Nikkei Asian Review is reporting.
The move comes as part of a broader strategy to diversify away from stocks and bonds into alternative asset classes which also include infrastructure projects and private equity. Mitsubishi UFJ Trust is the first outside asset manager specializing in the areas to be chosen thus far.
The allocation of investments into real estate will target low-yield, core properties with virtually no risk of dropping in value, according to The Street. That would mean a sizeable chunk of money will be funneled into investments in prime office buildings in Tokyo.
“The long-waited action was made finally,” Yukihiko Ito with the advisory company Asterisk Realty & Placement Agency was quoted as saying. “We expect their next announcement for managers for overseas real estate will have more impact for the market, and more Japanese investors to follow suit.”
GFIP has set a cap of only 5% of assets on alternative exposure, but that compares to the current level of only 0.07%. GPIF manages US$1.35 trillion as of the end of June.