April 25, 2018 / 6:15 AM / 8 months ago

UPDATE 1-Japan Post Insurance to raise FX-hedged foreign bonds in 2018/19

* To boost holdings of currency-hedged foreign bonds in 2018/19

* Ready to buy dollars below 105 yen, if dip looks short-lived

* JGBs not attractive unless 30-yr yield rises above 1 pct

* To keep holdings of Japanese stocks, shift to more in-house investments

* To increase alternative investments, mainly PE and real estate

By Tomo Uetake

TOKYO, April 25 (Reuters) - Japan Post Insurance Co plans to increase its holdings of currency-hedged foreign bonds in the year through March 2019, investment planning officials said on Wednesday.

The company, popularly known as Kampo, also plans to increase alternative assets, private equity and real estate in particular, Shigeaki Asai, senior general manager of the Investment Planning Department, said at a news conference.

Japan Post Insurance, the insurance arm of formerly state-owned conglomerate Japan Post Holdings, plans to increase investment in foreign bonds as domestic bond yields continued to remain low.

However, unlike some of its rivals that are planning to curb currency-hedging due to soaring costs, Kampo plans to increase the currency-hedged portion of investment, officials said.

“As European debts have higher yields than U.S. Treasuries or Japanese government bonds (JGBs) after deducting the cost of currency hedging, U.S. credit and European bonds, including peripheral European sovereigns, look more attractive to us,” said Ryosuke Fukushima, general manager, Investment Planning Department.

Although the Kampo does not expect the dollar to move radically in either way, the company aims to keep an eye out for any buying opportunities.

“If the dollar/yen weakens below 105 yen, and if the dip appears to be short-lived, we will flexibly use that opportunity to buy unhedged dollar bonds,” Asai added.

Buying JGBs would make sense to the insurer only when yields on 30-year bonds rise above 1 percent, he added.

Kampo expects the 10-year Japanese government bond (JGB) yield, which is at 0.060 percent, to be 0.100 percent by the end of March 2019.

The firm is looking to increase the holdings of alternative assets, especially private equity and real estate.

It plans to start investment in foreign real estate through funds in this quarter till June.

Kampo aims to gradually increase the holdings of alternative assets to 1.5 percent of its total assets under management, currently at around 77 trillion yen ($706 billion), in three years through 2020, they said.

Although Kampo plans to keep its holdings of Japanese stocks steady in 2018/19, it plans to shift towards in-house investments while reducing allocation to outside managers. ($1 = 109.0000 yen) (Reporting by Tomo Uetake, Editing by Sherry Jacob-Phillips)

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