Japan Picks Ex-MUFG Economist to Lead $1.7 Trillion GPIF #JapanFinance

(Bloomberg) — Japan named Kazuto Uchida, a former Mitsubishi UFJ Financial Group Inc. economist, as the head of the Government Pension Investment Fund.

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Bond market veteran Uchida will take over from current President Masataka Miyazono on April 1 for a five-year term to manage one of the world’s largest pension funds with total assets of ¥260 trillion ($1.72 trillion), Japan’s health ministry said on Tuesday. Uchida is a graduate of Keio University.

“As a market economist and strategist in the Japanese bond market, he was a pioneer,” who emphasized the importance of understanding economic theory to analyze, said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Based on his extensive knowledge and experience, we can expect him to communicate clearly with financial markets and the general public.”

The appointment comes as investors speculate whether the fund may change its current portfolio, which allocates a quarter of funds evenly to each of four assets — domestic stocks, foreign stocks, domestic bonds and foreign bonds.

GPIF will maintain the portfolio composition for five more years from fiscal 2025, which starts in April, the Nikkei said earlier this month. The fund is expected to make an announcement on its allocation by the end of this month.

In its previous review in 2020, GPIF increased the allocation to foreign bonds and cut domestic bonds amid the Bank of Japan’s aggressive monetary easing.

The fund reported in February its best return in the October-December period since the three months ended in March as strength in the dollar boosted valuation gains in overseas assets. The currency has since dropped as President Donald Trump’s tariffs raised concern over the strength of the US economy.

Uchida will be tasked with achieving returns with limited risks at a time when Japan’s population is aging while inflation raises living costs. The government in December proposed a higher return target of 1.9 percentage points above wage growth rate, up from the current target of 1.7 percentage points.

The GPIF was set up in 2006 to manage assets for the Japanese public pension system. It’s been led by former officials from the country’s main agricultural lender Norinchukin Bank for the past two terms.