TOKYO, April 17 (Reuters) – Japan’s Taiju Life Insurance coverage to allocate extra funds to numerous illiquid property, resembling personal equities, within the monetary yr that started on April 1, a senior funding planning official mentioned on Friday.
With the coronavirus pandemic bringing down international bond yields, the insurer seeks to boost yield by shifting some funds to illiquid property from yen bonds and currency-hedged overseas bonds, which make up the core of its present funding portfolio.
“In the meanwhile, bond yields are unattractive,” mentioned Hiroshi Nakamura, senior supervisor of funding planning at Taiju.
“However on the entire, we’re nonetheless maintaining a cautious stance given present market circumstances.”
Taiju Life, which holds property of seven.5 trillion yen ($69.6 billion), expects a world recession and restricted upside for U.S. and Japanese share costs.
In its funding plan for the present yr by March 2021, Taiju mentioned it goals to extend holding of what it calls new funding areas by 10 billion yen.
That features European hybrid bonds, direct lending and personal fairness, it mentioned. The insurer had elevated its funding within the space by about 5 billion yen within the earlier monetary yr as effectively.
As well as, Taiju additionally plans to step up funding in ESG (Environmental, Social and Governance) funds by greater than 10 billion yen.
The institutional investor seems to be to scale back funding in Japanese bonds and currency-hedged overseas bonds as a substitute, each by effectively over 10 billion yen, as present bond yields are too low.
Taiju expects the 10-year Japanese authorities bond yield to remain round minus 0.05%. It’s at the moment at 0.01% .
The life insurer, nevertheless, plans to extend the holding of overseas bonds with out foreign money hedge, which it buys to have matching property for its overseas foreign money denominated insurance coverage and annuity merchandise.
$1 = 107.78 yen
Reporting by Hideyuki Sano; Enhancing by Krishna Chandra Eluri