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.

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

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Ahead of Tuesday hearings on the 2008 collapse of the banking giant, state records show Ohio pensions suffered hundreds of millions of dollars in losses.

(April 20, 2010) — According to state records, Ohio’s public pension funds took a $480 million hit to investments in the wake of the collapse of banking giant Lehman Brothers.

The records were recently released to U.S. Rep. Mary Jo Kilroy of Columbus. Kilroy pushed for the hearings on Lehman’s collapse before the House Committee on Financial Services after a 2,209-page report released last month showed Lehman used an accounting gimmick to mask $50 billion in debt prior to its collapse in September 2008. Former Lehman Brothers Holdings Inc. Chairman and Chief Executive Richard S. Fuld Jr. plans to tell lawmakers that regulators were aware of Lehman’s status as it approached bankruptcy, maintaining that the firm’s actions were not concealed.

Three months after Lehman filed for bankruptcy protection, the Ohio Public Employees Retirement System witnessed the steepest decline, dropping to $73.3 million in December 2008 from $441.4 million in December 2007.

Meanwhile, the AP reported, the State Teachers Retirement System saw the value of its Lehman holdings shrink $80 million, while the School Employees Retirement System lost $18.5 million. The Ohio Police & Fire Pension Fund saw its value decline by $11.2 million and the Highway Patrol Retirement System lost $2.4 million in value during the same period.

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According to the AP, Kilroy said the examiner’s 2,209-page report highlighted questions about how regulators allowed the collapse of Lehman to happen and how other financial institutions are abusing the so-called “Repo 105” accounting practice, which allegedly allowed Lehman to hide the extent of its use of borrowed money, or leverage.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742