Japanese Pension Fund Cuts Active Investments Amid Volatility, Tightens Performance Scrutiny

Tokyo-based Federation of National Public Service Personnel Mutual Aid Associations, a pension fund with $68 billion in assets, has exited 10 out of 27 active funds. The move reduced active funds to 8.9% of assets, compared to 13% last year. The fund plans to boost active funds again when it finds suitable returns. Japan's policymakers are encouraging individuals to shift from savings to riskier investments to support retirees in the country's rapidly aging population.

Tokyo-based Federation of National Public Service Personnel Mutual Aid Associations, commonly referred to as KKR, has exited 10 out of 27 active funds, reducing its active fund holdings to 8.9% of its total assets [1]. This significant reduction, down from 13% a year earlier, is part of the pension fund's strategy to tighten scrutiny on asset managers' performance and align with Japan's policy shifts encouraging riskier investments.

KKR, which manages approximately ¥10 trillion ($68 billion) in assets, has appointed a new chief investment officer, Akihiro Konishi, who has emphasized the need for continuous monitoring of fund performance. Konishi likens the selection of active funds to choosing players in baseball, noting that the portfolio should have diverse roles, including power hitters and fast runners [1].

Japan's policymakers are encouraging individuals and pension funds to shift from savings to riskier investments to support the country's aging population. This policy shift is also driving KKR to re-evaluate its investment strategy. The pension fund plans to boost active funds again once it finds suitable returns, indicating a more dynamic and risk-averse approach to investment management [1].

The decision to exit underperforming active funds is a strategic move aimed at enhancing the fund's overall performance and aligning with the government's policy objectives. The transition to a more aggressive investment strategy is a response to the volatility of the market and the need to generate higher returns to support retirees.

In a related development, Japanese nail salon chain Convano Inc. has announced plans to invest $3 billion in Bitcoin as a hedge against the declining yen and economic uncertainty [2]. This move is part of a broader trend in Japan where firms are increasingly turning to cryptocurrencies as a means of safeguarding their reserves. Convano aims to own 21,000 BTC by March 2027, positioning itself as a significant player in the Bitcoin market.

The shift towards riskier investments and the increasing adoption of cryptocurrencies by Japanese firms reflect the broader economic trends in the country. As the yen continues to lose value due to long-term negative interest rate policies, firms are seeking alternative assets to maintain their wealth. The proposed tax reforms and favorable regulatory changes in Japan are also expected to support this trend.

References:
[1] https://www.bloomberg.com/news/articles/2025-09-01/a-68-billion-japan-pension-slashes-underperforming-active-funds
[2] https://www.livebitcoinnews.com/japanese-nail-salon-chain-convano-announces-3b-bitcoin-investment/