Why the World's Biggest Pension Fund Should Buy More Junk Bonds
- Wider spread on risk premium may signal time to buy: Nozawa
- Diversification could boost returns: Sumitomo Mitsui Trust
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A former senior economist at the Federal Reserve suggests that the world’s largest pension fund should step out of its comfort zone.
Yoshio Nozawa, who researched corporate bond spreads for the Fed over the past five years, said Japan’s Government Pension Investment Fund and its peers should buy more high-yield bonds and alternative assets such as real estate. The pension fund’s long-term performance of its 158.6 trillion yen ($1.43 trillion) in assets is more important than quarterly results, he said.