Japan’s $1.5 trillion pension fund seeks to diversify into Bitcoin

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund with over $1.5 trillion in assets under management, has announced that it will explore diversifying part of its portfolio into Bitcoin.

According to the announcement, GPIF will request information on illiquid alternative assets such as Bitcoin, gold, forests and agricultural land as part of its diversification efforts. Although it is not currently investing in these assets, this move indicates that the giant fund is actively researching options beyond stocks and bonds.

GPIF said it sought “fundamental knowledge of the assets it informs about” and wanted to understand “how foreign pension funds incorporate them into their portfolios”.

As a large manager of Japanese pensions, GPIF has been actively refining the sophistication of its investment strategies. Recently, we have allocated to a wider range of assets, including real estate, infrastructure, and private equity.

Bitcoin is the most notable asset under research. Although risky and volatile, BTC is increasingly seen as an inflation hedge like gold. GPIF emphasized that while the announcement does not guarantee future investments, the implications of a Japanese pension fund purchasing Bitcoin would shake up the industry.

The survey comes as Japan passed a new law allowing investment funds to directly hold bitcoin. This represents a broader move to legalize Bitcoin in the world’s third-largest economy.

GPIF manages the pensions of more than 67 million Japanese citizens. Currently, 97% of assets are domestic and foreign bonds and stocks. Diversifying beyond traditional assets would be a big change for influential institutional investors.

GPIF’s Bitcoin allocation of over $1.5 trillion could have a significant impact on the price and further legitimize Bitcoin.