Japan’s equity investors see a limited impact from the Government Pension Investment Fund’s reported decision to keep its asset allocation unchanged in the next fiscal year from April.

The fund will maintain its current portfolio composition of investing 25% each in domestic and foreign stocks and bonds for five more years from fiscal 2025, which starts in April, the business daily Nikkei reported Tuesday. A GPIF spokesperson declined to comment on the report, saying it will announce its asset allocation plan by March 31.

The report comes after months of speculation in financial markets over whether the 260 trillion yen fund , among the biggest pension funds in the world, would increase its allocation to domestic stocks and bonds. Japanese equity benchmarks opened little changed on Wednesday. 

The recent drop in Japanese equities has led to a lower weighting in GPIF’s portfolio, so if it were to increase its allocation now, the fund would be forced to purchase stocks, said Koichi Kurose, chief strategist at Resona Asset Management Co. “There was no need to be bullish on Japanese stocks when there’s uncertainties around the Trump administration’s policies.” 

After reaching an all-time high in July last year, the benchmark Topix index has dropped more than 8%. US President Donald Trump’s tariffs have sparked volatility in global markets in recent weeks as an escalating trade war raised concern over the impact on economic growth.

“I don’t think there will be much disappointment in the market” from the report on GPIF, said Mitsushige Akino, president of Ichiyoshi Asset Management. There weren’t big expectations of an increase, “though some were hoping for that,” he said. 

In its previous review in 2020, the fund increased the allocation of foreign bonds to 25% from 15% while cutting domestic bonds to 25% from 35% as the Bank of Japan’s monetary easing crushed returns from domestic bonds. 

The GPIF reviews its model portfolio every five years and is expected to make a formal announcement on its asset allocation for the next five fiscal years by the end of month.

With assistance from Momoka Yokoyama and Toshiro Hasegawa.

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