According to Nikkei' s exclusive report, the GPIF is expected to maintain its current asset weightings in its basic portfolio from FY2025, with each of the four asset classes retaining their 25% allocation. The article did not specify any changes to the allowable deviation ranges from these target weights.
This news aligns with our base case view that the GPIF would maintain its current basic portfolio beyond April 2025. While the initial market reaction saw some JPY selling immediately after this headline release, it was only temporary.
The GPIF's decision to raise its target real return by 0.2 percentage points to 1.9% from FY2025 should not be interpreted as a move to take on additional risk. The introduction of annual portfolio reviews starting in fiscal year 2025 was already outlined in the Ministry of Health, Labour and Welfare's earlier proposal draft.
According to an 11 March 2025 article published in Nikkei , the GPIF (Japan’s government pension investment fund), has likely decided to maintain its asset allocation from April 2025 onwards. The GPIF is scheduled to announce its new policy portfolio for the fifth medium-term plan (five-year plan) from FY2025, due by end-March 2025. That said, it appears Nikkei was able to get a breaking story prior to the announcement scheduled for release later this month. Should Nikkei’ s report prove correct, the GPIF’s asset allocation weighting for all asset classes (i.e., domestic bond, foreign bond, domestic equity, foreign equity) would be at 25%. However, regarding the deviation limits around the target allocation, whether these bands remain unchanged has yet to be determined, as no information regarding this issue was noted in the article.
In previous reports, including our monthly capital flow monitor , as well as reviews on the GPIF’s investment results , we have flagged that the GPIF is unlikely to change its asset weightings of its portfolio beyond April 2025. In fact, in contrast to the case in 2020, there has been no recent strong buying of specific assets prior to the announcement of the release of the new basic portfolio. Thus, most of the material in today’s Nikkei ’s report about the GPIF was not something completely unforeseen, and instead is in line with our base case view.
However, immediately following this news headline release, we saw a temporarily sharp JPY depreciation against major currencies, with USD/JPY jumping to 148.00 from 147.50. We attribute this price action to three main reasons:
As previously stated, we maintain our view that this latest news from Nikkei is not something meaningful that would further push CCY/JPY higher. In fact, we note that the rise in CCY/JPY did not sustain and the market eventually faded the move. However, we acknowledge that those pairs’ price actions were also partly affected by the widely reported US JOLTS data release, as well as US President Trump’s harsh tariff policy stance on Canada (source: Bloomberg ).
