japan-ponders-sovereign-wealth-fund

Japan ponders sovereign wealth fund

Under a government panel proposal, the fund would use government pension fund assets, rather than foreign exchange reserves, to boost returns.
A panel set up by JapanÆs ruling Liberal Democratic Party has announced plans to employ funds from the government pension investment fund GPIF for new investments, using new professional managers. The funds would be invested domestically as well as internationally.

Japan has a huge government-controlled pension system that is mostly invested in low-yielding government bonds and Japanese equities. It also has $1 trillion in foreign exchange reserves. It would be tempting to use one to boost the other, but that is highly unlikely, says Susumu Kato, chief economist at CLSA in Japan.

ôItÆs taboo for the Japanese government to discuss selling off its dollar reserves. Japan is the single biggest holder of US Treasury bonds...
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