(June 7, 2013) — A move by Prime Minister Shinzo Abe to reduce the Japanese national pension fund’s allocation to domestic bonds will free up roughly the equivalent of the Alberta Investment Management Corporation’s assets to flood global stock and bond markets.
Some $70 billion is to be allocated to global bonds and equities, the Prime Minister announced today, taking money away from domestic fixed income markets.
The shift will see the current 67% allocation to domestic bonds-a previous long-term mainstay for the fund-reduced to 60%. The capital will be redistributed, with an extra three percentage points granted to each global equities and bonds with the remaining one percentage point topping up the domestic equities allocation.
In capital terms, 3% of the fund’s current $1.16 trillion is $34.7 billion.
After the shake-up-and there is so far no published timetable for the redistribution-the level of domestic and international stocks will both be 12% of the portfolio, with foreign bonds slightly behind on 11%.
The amount to wash into equity and bond markets is also roughly equivalent to the assets of the state of New Jersey public pension.
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