Japan Mega-Pension Fund Dives into Stocks, Foreign Assets, Loses Shirt. People Not Amused…(Pensions WorldWide Are Toast…)

Sunday, August 28, 2016
By Paul Martin

by Wolf Richter
August 27, 2016

“It will not harm the pension beneficiaries”: official

This is how the report by Japan’s Government Pension Investment Fund (GPIF) for the March-June quarter – the first quarter in Japan’s fiscal year – started out in order to soothe the frazzled nerves of the people who’d paid into this system all their working lives: the fund is managed “in the long-term, and its investment results should be assessed in the same manner.”

OK we get that. But what a fiasco.

The GPIF isn’t alone. Pension funds in the US and elsewhere are in deep trouble. Many of them have been taking on enormous risks to solve their underfunding problems. It has been called the “global pension crisis.” Some corporate and union pension funds in the US have already become insolvent. Others are heading that way. Local and state pension funds are neck-deep in trouble. Yet, the Fed-engineered asset bubbles have lifted all boats….

But few big public pension funds can hold a candle to the GPIF’s October 2014 decision to dive into Japanese stocks and foreign stocks and bonds near the peak of the Japanese stock market rally.

Actually, it didn’t voluntarily dive into it.

It was pushed into it by the Abenomics-obsessed government and its reckless way of trying to manipulate up the stock market. The goal was to plow 20% to 25% of the fund’s assets into Japanese stocks. At the time, the fund still had about $1.4 trillion in assets, so 25% would amount to about $350 billion. It meant some serious buying over a year or two, which would inflate the stock market.

The Rest…HERE

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