Abe to urge review of Japan public fund strategy - sources

By Taro Fuse and Noriyuki Hirata

REUTERS - Japan's government is set to urge the nation's public pension funds - a pool of over $2 trillion - to increase their investment in equities and overseas assets as part of a growth strategy being readied by Prime Minister Shinzo Abe, according to people with knowledge of the policy shift.

The steps represent the first time the Abe administration has looked to mobilize Japan's massive pool of public savings to support a growth agenda that aims to spur more consumer spending and corporate investment by pushing the economy toward 2 percent inflation.

Specifically, the government will set up a panel in July to consider the investment strategies of public funds, which, like other Japanese institutional investors, have relied heavily on investment in Japanese government bonds in recent years.

The panel will look to reach a conclusion as soon as this autumn on strategy and will urge implementation of the new investment guidelines no later than April 2015, according to the people with knowledge of the preparations who asked not to be named because an announcement has not been made.

In addition to the Government Pension Investment Fund, known as GPIF, the more aggressive investment strategy would apply to about 100 other semi-governmental funds and public funds such as Federation of National Public Service Personnel Mutual Aid Associations, known as KKR.

Reuters reported last week that GPIF has already been considering change to its portfolio strategy that could allow its investment in domestic stocks to grow with a rallying market. The fund manages the retirement savings of Japanese government employees.

(Reporting By Taro Fuse and Noriyuki Hirata; Additional reporting by Chikafumi Hodo; Editing by Tim Dobbyn)