The Government Pension Investment Fund (GPIF) of Japan, the country’s largest pension fund, is pondering over an expansion of its investment portfolio to encompass less liquid assets such as Bitcoin. This bold move showcases the fund’s growing inclination towards digital currencies and innovation amidst evolving market trends.
Indicating its interest in a broad range of investments, the GPIF has initiated a request for information (RFI). The list of potential assets include domestic and international bonds, stocks, real estates, gold, and notably, Bitcoin. With this action, the GPIF demonstrates its readiness to venture into traditional and non-traditional avenues and stay abreast of dynamic market trends.
At this stage, the primary goal of the GPIF is to diversify its holdings, augment returns while curtailing risk. Bitcoin’s inclusion in their RFI testifies the GPIF’s willingness to venture into pioneering financial domains and potentially embrace digital assets.
Interestingly, several pension funds worldwide like the National Pension Service of South Korea and the Houston Firefighters’ Relief and Retirement Fund have already fused their portfolios with cryptocurrency investments. An unusual mix of volatility and potential makes cryptocurrencies an increasingly popular choice for those exploring high-yield options despite their unpredictability.
A recent CFA Institute survey (April 2022) revealed that about 94% of state government and pension plan sponsors had ventured into cryptocurrency investments in some form. With 62% of company benefit schemes having stakes in digital assets, this indicates a major shift towards digital assets in institutional finance. Approximately 78% of investment consultants also reported involvement in crypto investments. Notably, 56% of them used a blend of direct investing and fund allocation.
In Arizona, lawmakers are advocating for a policy that would necessitate retirement fund managers to allocate a portion of the state’s retirement funds towards digital assets. Under this proposal, ASRS (Arizona State Retirement System) and PSPRS (Public Safety Personnel Retirement System) would have to execute a comprehensive viability and risk assessment of such investments. This initiative, while still in a nascent stage, signals a significant shift in the perception of digital assets within the realms of public finance and retirement planning.
At present, Bitcoin’s value stands around $63,000, marking an annual surge of more than 120%. GPIF’s speculated plan could trigger substantial changes in the global landscape of pensions and retirement funds if executed.
