Japan Flows & FX Positions: Retail investors keep betting on intervention

Research evidence excerpt

Japan Flows & FX Positions: Retail investors keep betting on intervention

Ikue Saito AC Global Markets Strategy

(65) 6801-3154 09 July 2026 J P M O R G A N

ikue.saito@jpmorgan.com

consecutive months of monthly net buying. Pension funds net purchased 1.5 trillion yen

of foreign bonds while net selling 1.3 trillion yen of foreign equities in June, suggesting

that the rebalancing from foreign equities to bonds is continuing (Figure 2PensionfundscontinuedtobuyforeignbondsinJuneevenafterrecord-highpurchasesinMay).

• The GPIF annual report for FY2025 shows nominal annual profit in FY2025 was

+16.47%, with a 41.4 trillion yen gain. The average annual market return for GPIF since

FY2001 has reached 4.67% (Figure 5AverageanualmarketreturnforGPIFsinceFY201hasreached4.67%Figure 4Pensionfundshavebenrebalancingfromequitiesintobonds). The allocation was aligned with the basic

portfolio, with 26.9% for domestic bonds, 23.8% for domestic equities, 24.8% for foreign

equities and 24.5% for foreign bonds, amounting to 293.6 trillion yen in the total

portfolio.

• So far, an allocation increase in domestic bonds has not been observed. As we noted in

“Is GPIF a Panacea?”, it remains uncertain whether reducing the weight of foreign bonds,

which have boosted performance in recent years, would still be sufficient to achieve the

return target.

• Activities by lifers remain subdued, despite the long-held expectation for them to

repatriate their foreign assets and reallocate to JGBs.

Figure 2: Pension funds continued to buy foreign bonds in June even after Figure 3: Currency breakdown of foreign bond investment flows

record-high purchases in May ¥ in trillions; net purchases of foreign bonds by Japanese investors, classified by currency