By Takashi Umekawa and Takaya Yamaguchi
TOKYO (Reuters) – Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, will allow investing up to 31% in foreign bonds by widening permissible range of deviation from the allocation target, two sources familiar with the matter said.
The GPIF will raise its foreign bond allocation target to 25% from 15% in its new portfolio which the fund is due to disclose later this month, Reuters previously reported.
The range of deviation in foreign bonds will be extended to 6% from the current 4%, said the government sources, who declined to be identified because the plan has not been made public. That will boost the upper limit of investment in foreign bonds to 31% from 19%.
A spokeswoman for GPIF, which managed 169 trillion yen (1.29 trillion pounds) as of end-December, declined to comment.
While raising the foreign bonds allocation target, the fund will cut its domestic bond allocation target to 25% from 35%, the sources said.
The changes will mean that without deviations, the fund’s portfolio will be evenly split at 25% each across domestic and foreign stocks and domestic and foreign bonds.
In the current portfolio, the allocation targets are 25% each for domestic and foreign stocks, 35% for domestic bonds, and 15% for foreign bonds.
(Reporting by Takashi Umekawa and Takaya Yamaguchi; Editing by Raju Gopalakrishnan)