Japan’s second-biggest pension fund aims to double its holdings of alternative assets such as real estate and private equity to boost returns.
Pension Fund Association for Local Government Officials, known as PAL, is targeting alternative investments rising to near 5% of one of its main funds from 2.1% as of March, said Satoshi Uemura, an executive director at the organization, in an interview.
PAL oversaw about ¥35 trillion ($229 billion) of assets as of the end of March, making it second only to Government Pension Investment Fund in terms of the size of its asset holdings among Japanese retirement funds, according to official data.
Japanese policymakers have been pushing pension funds to strengthen their investment capabilities while also encouraging households to shift their savings to investments. PAL and other public pension funds have been parking more of their cash in alternative assets to improve their investment profits.
PAL invests in a range of alternative assets including infrastructure, private debt and bank loans. The organization said it would mainly add assets with relatively low risk, as it’s a public pension. It said last month that it wants to increase its alternative asset holdings to about ¥740 billion by the end of March 2030 from ¥370 billion.