* To increase risk assets to 12 pct from 10 pct of total by
* To raise holdings of stocks, foreign bonds, alternative
* Plans to start buying high yield, EM bonds, domestic
* To buy some yen bonds as they are less unattractive than
(Adds details, quotes and background)
By Hideyuki Sano
TOKYO, April 26 Japan Post Insurance Co
plans to step up investment in risk assets including stocks,
foreign bonds and alternative investments in the year through
March 2018, investment planning officials said on Wednesday.
The insurance arm of formerly state-owned conglomerate Japan
Post Holdings Co Ltd, also plans to buy Japanese
government bonds (JGBs) as yields have recovered from negative
levels, the officials told a news conference.
The firm, popularly known as Kampo, holds assets of over 80
trillion yen ($719 billion) and plans to boost allocation to
risk assets to 12 percent of the total by March 2018 from an
estimated 10 percent at the end of March 2017, the officials
Kampo plans to increase holdings of foreign bonds - both
those with currency hedge and those without - stocks and
alternative assets in the current financial year.
One target area to step up investment this year is credit
products overseas, they said. Kampo currently invests mainly in
U.S. investment grade bonds and bank loans but it plans to buy
European assets, emerging market bonds and junk bonds this year.
"The credit spreads are quite tight both in the States and
in Europe. But we think their fundamentals including fund
inflows to these assets remain sound. So while we are not that
bullish, we need to maintain a certain level of allocation,"
said Takayuki Haruna, head of credit and alternative investment.
Kampo has been stepping up investment in European sovereign
bonds in the past few years.
"European yields are low in absolute terms. And after we've
been buying them in the last few years, our exposure has become
considerable. So it's not that we are not going to buy them but
our focus is more on credit products," said Ryosuke Fukushima,
general manager of investment planning.
The insurer also plans to expand investment in alternative
assets, such as hedge funds, private equity, infrastructure
finance and real estates.
Its investment in properties through funds could start as
early as this quarter, Haruna said.
Kampo plans to reduce its holding of domestic bonds in the
year to March 2018.
But officials said Japanese government bonds look less
unattractive now compared with last year, as their yields
recovered substantially last year as the Bank of Japan
introduced a new policy framework in September.
Kampo expects the 10-year JGB yield to rise to 0.200 percent
compared with around 0.020 percent now.
($1 = 111.23 yen)
(Reporting by Hideyuki Sano; Editing by Chang-Ran Kim and