World’s largest pension fund explores diversifying into Bitcoin

2024/03/20 Innoverview Read

Japan’s Government Pension Investment Fund (GPIF), the largest pension fund in the world, is looking at Bitcoin  as a potential diversification tool.

The GPIF officially announced on March 19 the development of new long-term investment policies in response to “major changes in the economy and society, and rapid technological progress.”

In response to the new challenges, the GPIF is launching a five-year research plan to explore innovative methods to diversify investments, with an emphasis on sustainability and risk management.

As part of the plan, the GPIF has requested data on various potential investment diversification tools, including information about the assets the company considers “illiquid” and doesn’t hold. Such assets include cryptocurrencies like Bitcoin, precious metals like gold and other assets, the announcement notes.

GPIF’s new announcement is a request for information and does not guarantee that the firm will expand into new assets like Bitcoin in the future. Instead, the company will consider whether to conduct future research based on the collected data.

Established in 2006 by the Japanese government, the GPIF mainly focuses on investing in core infrastructure funds, which invest in assets essential for social and economic activities. The company currently diversifies investments in traditional assets like domestic and foreign stocks and bonds, as well as alternative assets such as infrastructure and real estate.

In the annual report for 2022, GPIF stressed that diversification is the company’s primary investment strategy, stating:

“Our primary investment strategy is diversification by asset class, region, and timeframe. While market prices may fluctuate in the short term, GPIF will take full advantage of our long-term investment horizon to achieve investment returns in a more stable and efficient manner [...]”

GPIF’s total assets under management amounted to 225 trillion Japanese yen ($1.54 trillion) as of the end of December 2023, making it the world’s largest pension fund.

While the GPIF is only starting to think about potentially adding Bitcoin to its portfolio, some global pension funds have already adopted Bitcoin-related assets. In November 2023, South Korea’s National Pension Service announced the purchase of over 280,000 shares of the United States-based Coinbase.

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