Boston, MA, April 26, 2012 - A new survey by JPMorgan Chase has found that Japanese pension funds are eager to invest more in alternative investments – and particularly in hedge funds.
The move towards alternative asset classes is due to the fallout from a loss of pension holders money from investments in traditional assets, claims Alternative Asset Analysis (AAA), an alternative investment advocacy group.
AAA claims that Japan is in a difficult situation with a rapidly ageing population. Pension funds are under pressure after one fund lost $1 billion – prompting them all to considering less risky alternative funds, which can be effective in diversifying portfolios.
AAA, which supports a range of alternative investment options, claims that more and more institutional investors are turning to alternatives in order to steer clear of assets that are impacted by general economic trends. Alternatives, such as real estate, commodities and timber, tend not to correlate closely with equities, and, as a result, are less likely to drop in value when traditional assets lose value.
Japan is facing the first year in which its baby boomer generation is set to retire and its working population is expected to drop in number dramatically. It is trying different approaches to pension fund investment as a result.
AAA’s analysis partner, Anthony Johnson, explained that this new alternative tactic in Japan reflects a general international trend towards alternative asset classes. He said, “following the global economic crisis, investors have changed their attitudes to investing and are looking for tangible assets to invest in that will offer long-term income.”
He added, “There is also a growing emphasis on ethical investments and investing in assets like real estate, precious metals, art and forestry offer an alternative that avoids dealing with stocks and shares and bonds – and banks.”
AAA supports ethical investments such as sustainable forestry projects like those run in Brazil by firms like Greenwood Management.
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