Japanese Pension Plans Increase Alternative Investments

Date: Friday, November 7, 2008
Author: FINalternatives.com

Japanese pension funds are bumping up their alternative investments buckets while emptying out their domestic equities portfolios in an attempt to diversify their holdings.

According to a new survey by JPMorgan Asset Management, 69.7% of pension plans said that they are trimming equity allocations mainly in domestic shares, while 51.5% plan to shift into alternative assets such as hedge funds and private equity.

The survey showed Japanese pension funds' investments in alternative assets were concentrated in absolute return products, such as funds of funds, with a participation rate of 79%, which is higher than the 59% in the U.S. and 42% in Europe. Japanese investors, which traditionally have not invested in private equity and real estate, are now showing interest in the two asset classes as well as infrastructure and commodities.

Nearly half of the respondents surveyed managed assets of more than US$1 billion.