Survey: Japan Pensions Raise Investments in Emerging Markets

(April 21, 2010) — A survey by JP Morgan Asset Management shows Japanese corporate pension funds have slashed investments in domestic stocks while raising exposures to emerging markets.

“Many pension funds are lowering weightings in risk asset such as stocks as many have lowered their target returns,” Hidenori Suzuki, a vice president at JP Morgan Asset Management Japan, told a news conference, according to Reuters. Suzuki also indicated that corporate pensions have shown heightened interest in taking exposures in real estate and infrastructure-related instruments.

The survey, which studied 131 corporate pension funds with $130 billion in assets, showed that corporate pension funds on average held 20.2% of their investment funds in domestic equities at the end of March, down from 22.5% of investments the previous year. In Japan, corporate pension funds posted a positive return for the first time in three years in the first quarter.

Furthermore, 53% of 69 Japanese pension funds that replied to the survey said they plan to increase investment in emerging-market equities. Nearly 27% of respondents said they intend to raise investment in emerging-market bonds, Global Pensions reported, and about 37% expect to boost allocations to alternative investments such as hedge funds.

JP Morgan plans to release a full report later this month.