Japan's Pension Fund Association for Local Government Officials, Chikyoren, has announced it has hired UBS Asset Management for a global real estate investment mandate.
Chikyoren, the country's second largest pension fund with $185 bn (€167 bn) of assets, is one of a number of pension funds in the country that have been looking to invest into alternative assets abroad.
The Government Pension Fund of Japan (GPIF) announced last year that it was planning to invest 3-4% of its $1 tln (€950 bn) global investment portfolio in real estate as part of plans to shift away from dismal returns on bonds and focus on higher-yielding assets.
GPIF - the world's largest state pension vehicle - will introduce alternative assets including real estate in its new policy asset mix within a maximum of 5% in order to ‘to achieve efficient investments by diversification, policy’.
The move is a reflection of the structural shift in pension firms' long-term asset allocation strategy, and not merely a short-to-medium term remedy to compressed bond yields, according to market experts.